Rane (Madras) LimitedFor taking an investment decision, investors must rely on their own examination...

INFORMATION MEMORANDUM

RANE ENGINE VALVE LIMITED

Registered Office: “Maithri”, 132, Cathedral Road, Chennai – 600 086.Tel.: (044) 28112472-73 Fax: (044)

28112449.Website: www.rane.co.in Email: [email protected]

(Incorporated as a Public Limited Company on March 9,1972 under the Companies Act, 1956 as “Techcons

Limited” under the provisions of the Companies Act, 1956. In terms of the Scheme of Demerger, Merger and

Amalgamation for transfer of the manufacturing undertaking of erstwhile Rane Engine Valves Limited, as

approved by the Hon’ble High Court of Judicature at Madras, the name of the Company was changed to Rane

Engine Valve Limited w.e.f. February 6, 2008.

INFORMATION MEMORANDUM FOR LISTING OF 5,150,992 EQUITY SHARES OF RS. 10 EACH FULLY PAID-UP

GENERAL RISKS

Investment in equity and equity-related securities involve a degree of risk Investors are advised to read the

Risk Factors carefully before taking an investment decision in the shares of Rane Engine Valve Limited.

For taking an investment decision, investors must rely on their own examination of the Company including

the risks involved. The securities have not been recommended or approved by the Securities and Exchange

Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document.

ABSOLUTE RESPONSIBILITY OF RANE ENGINE VALVE LIMITED

Rane Engine Valve Limited having made all reasonable inquiries, accepts responsibility for, and confirms

that this Information Memorandum contains all information with regard to Rane Engine Valve Limited,

which is material, that the information contained in this Information Memorandum is true and correct in all

material aspects and is not misleading in any material respect, that the opinions and intentions expressed

herein are honestly held and that there are no other facts, the omission of which makes this Information

Memorandum as a whole or any of such information or the expression of any such opinions or intentions

misleading in any material respect.

LISTING

The Equity Shares of Rane Engine Valve Limited are proposed to be listed on Madras Stock Exchange

Limited (MSE), National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited,

Mumbai (BSE).

SHARE TRANSFER AGENT

Integrated Enterprises (India) Ltd.

2nd Floor, “Kences Towers”, No.1 Ramakrishna Street, North Usman Road, T Nagar, Chennai 600017.

Tel: (044) 28140801 Fax: (044) 28142449

E-MAIL: [email protected]

1


TABLE OF CONTENTS

TITLE PAGE NUMBER

SECTION I – GENERAL DEFINITIONS AND ABBREVIATIONS 3 FORWARD-LOOKING STATEMENTS 4 SECTION II – RISK FACTORS RISK FACTORS 5 SECTION III – INTRODUCTION SUMMARY 7 INDUSTRY AND BUSINESS OVERVIEW 7 GENERAL INFORMATION 8 CAPITAL STRUCTURE 9 OBJECTS OF THE SCHEME 14 STATEMENT OF TAX BENEFITS 15 SECTION IV – ABOUT THE COMPANY 18 HISTORY AND CERTAIN CORPORATE MATTERS 21 OUR BUSINESS 21 OUR MANAGEMENT 23 OUR PROMOTER 30 OUR GROUP COMPANIES 31 CURRENCY OF PRESENTATION 32 DIVIDEND POLICY 32 SECTION V – FINANCIAL STATEMENTS FINANCIAL STATEMENTS 33 FINANCIAL STATEMENTS OF GROUP COMPANIES 56 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

59

SECTION VI – LEGAL AND OTHER INFORMATION OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS 62 GOVERNMENT APPROVALS 77 OTHER REGULATORY AND STATUTORY DISCLOSURES 77 SECTION VIII – MAIN PROVISIONS OF OUR ARTICLES OF ASSOCIATION 81 SECTION IX – OTHER INFORMATION MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 89 DECLARATION 89

2


SECTION I

GLOSSARY OF TERMS AND ABBREVIATIONS

BSE The Bombay Stock Exchange Limited, Mumbai Company / REVL Rane Engine Valve Limited (Formerly known as Techcons Limited) CDSL Central Depository Services (India) Limited Demerged Company 1 Rane Engine Valves Limited Demerged Company 2 Rane Brake Linings Limited DIP Guidelines The SEBI (Disclosure and Investor Protection) Guidelines, 2000 DP Depository Participant FEMA Foreign Exchange Management Act, 1999 HCV Heavy Commercial Vehicle

Investor Grievance Committee The Investor Grievance Committee set up to attend to the grievances of investors.

Issue The issue of equity shares of Rane Engine Valve Limited in terms of this Composite Scheme of Demerger, Merger and Amalgamation

KML Kar Mobiles Limited LCV Light Commercial Vehicle MSE Madras Stock Exchange Limited MNC Multinational Companies NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited OEM Original Equipment Manufacturer PACs Persons Acting in Concert RIL Rane Investments Limited RBL Rane Brake Lining Limited (formerly known as Rane Brake Products Limited) RBI Reserve Bank of India Registrar / IEP Integrated Enterprises (India) Ltd. RHL Rane Holdings Limited RoC Registrar of Companies, Tamil Nadu, Chennai, Andaman & Nicobar Islands SCHEME Composite Scheme of Demerger, Merger and Amalgamation sanctioned by the

High Court of Madras, vide order dated December 20, 2007. SEBI Securities and Exchange Board of India SEBI Act Securities and Exchange Board of India Act, 1992 SIAM Society of Indian Automobile Manufacturers Shares Fully paid-up equity shares of Rs. 10/- each TPM Total Productivity Management TQM Total Quality Management UV Utility Vehicle

3


FORWARD LOOKING STATEMENTS

Unless stated otherwise, the financial data in this Information Memorandum is derived from our financial statements prepared in accordance with Indian GAAP. Our current financial year commenced on April 1, 2007 and shall end on March 31, 2008. In this Information Memorandum, any discrepancies in any table between the total and sums of the amounts listed are due to rounding-off. Unless stated otherwise, industry data used throughout this Information Memorandum has been obtained from industry publications. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but their accuracy and completeness is not guaranteed and their reliability cannot be assured. Although we believe that industry data used in this Information Memorandum is reliable, it has not been independently verified. The information included in this Information Memorandum about the various other companies is based on their respective Annual Reports and information made available by the respective companies. Any projections, forecasts and estimates contained herein are forward looking statements that involve risks and uncertainties. Such statements use forward looking terminology like “may”, “believe”, “will”, “expect”, “anticipate”, “estimate”, “plan” or other similar words. The Company’s actual results could differ from those anticipated in these forward looking statements as a result of certain factors including those which are set forth in the “Risk Factors” section. All forward looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those contemplated by the relevant forward looking statement. Important factors that could cause actual results to differ materially from our expectations include, among others:

• General economic and business conditions in India and other countries; • Our ability to successfully implement our strategy, our growth and expansion plans and technological

changes; • Changes in the value of the Indian Rupee and other currency changes; • Changes in laws and regulations in India; • Changes in political conditions in India; • Changes in the foreign exchange control regulations in India.

For further discussion of factors that could cause our actual results to differ, see the section titled “Risk Factors”. By their nature, certain risk disclosures are only estimates and could be materially different from what actually occur in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. We do not have any obligation to and do not intend to, update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition.

4


SECTION II RISK FACTORS

A. RISK INTERNAL TO THE COMPANY

Volatility in the Auto Industry:

As the Company caters exclusively to the automotive industry, the Company’s business fortunes depend on the performance of this industry. There have been substantial changes in the Indian automobile industry in the last few years leading to consolidation, entry of new players and technological changes. Coupled with the sustained growth in Indian economy, the industry has registered substantial growth over the past few years. However, past experience has shown that the industry is susceptible to cyclical downturns and events that result in decreased demand in the automobile industry could have an adverse impact on the Company’s operations and financial conditions.

Dependence on Original Equipment Manufacturers (OEM)

Traditionally, the company has focused on supply of engine valves, guides and tappets to OEM’s of passenger cars and utility vehicles, commercial vehicles, two wheelers and farm tractors. Continuous price reduction and escalation in input costs have resulted in decline in operating profits during the year 2007-08. Concerns of inflation caused through supply side constraints and increases in prices of commodities continued. These have resulted in monetary measures, which have driven up the interest rates. It should be expected these would have a dampening effect on the growth sentiments.

Increase in input costs

Our major input costs consist of steel, employee cost, power & fuel. Steel price has increased steeply in the recent past. We may not be able to pass on all increase in the cost of inputs to the customers and this could have adverse impact on financial condition and operations of the Company.

Pricing Pressures

Due to increased competition and pressure from OEM customers especially in passenger car segments, the company’s product prices may come down in future which may have an adverse effect on profits of the company.

Foreign Exchange rates fluctuations

The major portion of the Company’s export receivables are denominated in US Dollar, while most of the input costs are incurred in Indian Rupees and Japanese Yen. The strengthening of Indian Rupee with respect to USD could adversely impact the profitability of export sales and this situation could continue if the Indian Rupee continues to appreciate against USD.

Contingent Liabilities

In terms of the Scheme of Demerger, Merger and Amalgamation, the accumulated contingent liabilities of erstwhile Rane Engine Valves Ltd. as on December 31, 2007 (Appointed Date) amounting to Rs.173.49 Lakhs has been transferred to the company.

5


Litigations

Our company, director and group companies are involved in certain legal proceedings in India. The company may not assure you that all the proceedings pending against the company may be decided in its favour.

For detailed information please refer to the section titled “OUSTANDING LITGATIONS AND MATERIAL DEVELOPMENTS”, on page 62.

B. RISK EXTERNAL TO THE COMPANY

General Economic conditions

The fortune of Indian auto-components industry is largely dependent on the performance of Indian automobile industry, which in turn is dependent on the growth of the economy. Following the liberalization of the Indian economy initiated by the Central Government in the early 1990s, the GDP registered an average growth of over 7% during the period 1993-1997. The Indian automobile industry too registered double-digit growth rates during this period, largely due to the entry of global manufacturers and the increased customer demand for the products. When the economic growth started slowing down in 1997, the automobile and the auto components industries also started the cyclical down turn. Our industry could be subjected to such down turns in the future resulting from possible slow down of the Indian economy. This could adversely affect the financial performance of the Company.

Increased competition from low cost destinations

Along with India, other countries, especially in the South-East Asia and the Asia Pacific regions have become the sources for procurement of auto components by the international automobile manufacturers. Further, countries like China and Taiwan, continue to export low priced products. India is likely to face increased competition from these countries for export of auto components.

Changes in government policies and regulations.

Any significant change in India’s economic liberalization and deregulation policies could affect business and economic conditions generally and consequently our business also. Further, potential changes in environmental and other regulations by the Central and State Governments could adversely affect our business and financial conditions.

Follow source of MNC OEM’s

MNC OEM especially in passenger car industry prefer their component suppliers situated abroad to supply in India also. This may affect the company’s sales and market share in the OEM business in future.

Likely entry of MNC’s in India MNC’s from other countries are eyeing the Indian market keenly and are likely to set up manufacturing/ distribution facilities in the country, which may affect the market shares of the company.

6


SECTION III

INTRODUCTION

SUMMARY YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE RISK FACTORS AND THE MORE DETAILED INFORMATION ABOUT THE COMPANY AND FINANCIAL DATA INCLUDED ELSEWHERE IN THIS INFORMATION MEMORANDUM. (Sources: The information presented in this section has been extracted from publicly available documents from various sources, including officially prepared materials from the Government and its various ministries and has not been independently prepared and verified by the Company. The information provided is based on present business activities of the Company.) INDUSTRY AND BUSINESS OVERVIEW Indian auto- component industry is relatively small by global standards with some individual global auto component companies having sales far in excess of that of the Indian auto component industry as a whole. The size of the industry has, however, increased in the last decade with the rapid growth in Indian automobile production, triggered largely by the economic liberalization and with global automobile players setting up manufacturing facilities in India. The other driver for expansion of the Indian auto-component industry has been the increasing volume of exports. Major global automobile manufacturers/Tier-1 suppliers are already sourcing auto components from India for their global requirements. The table below highlights the segmental growth of the Indian automotive industry during the last five years:- Particulars 2006-2007 2005-2006 2004-2005 2003-2004 2002-2003

Sales

(Nos)

Growth

(%)

Sales

(Nos)

Growth

(%)

Sales

(Nos)

Growth

(%)

Sales

(Nos)

Growth(

%)

Sales

(Nos)

Growth

(%)

Passenger Cars 1,323,404 19 1,113,598 9 1,023,927 23 830,369 34 621,774 8

Utility vehicles 222,111 13 196,585 7 183,656 24 160,370 24 129,490 4

Light

Commercial

Vehicles

150,751 7 141,291 23 139,945 28 110,715 34 82,465 28

SCV (one T &

below)

74,983 146 30,496 - -

Medium and

heavy

commercial

vehicles

294,266 34 219,297 4 210,087 27 161,161 35 119,210 25

Farm Tractors

335,464 15 291,213 15 210,087 30 191,012 4 145,451 -28

Three Wheelers 555,887 28 434,424 17 371,208 5 340,729 23 276,464

Two Wheelers

8,439,611 11 7,601,340 18 6,454,765 17 5,624,950 10 5,109,419 20

The tractor industry has recovered and registered a positive growth throughout the last four years.

7


The competitive edge Indian auto-component manufacturers enjoy which could enable them become global players are:

• Cost effective manufacturing technology and a penetrative strategy • High levels of quality and productivity achieved by embracing Japanese concepts and best practices

such as Total Quality management (TQM), Total productivity management (TPM), Six Sigma and Lean Production system

• Legal, financial and accounting systems in place GENERAL INFORMATION Incorporated as a Public Limited Company on March 9, 1972 under the Companies Act, 1956 as “Techcons Limited” under the provisions of the Companies Act, 1956. In terms of the Scheme of Demerger, Merger and Amalgamation for transfer of the manufacturing undertaking of erstwhile Rane Engine Valves Limited, as approved by the Hon’ble High Court of Judicature at Madras, the name of the Company was changed to Rane Engine Valve Limited w.e.f February 6, 2008. Registered Office “Maithri”, 132, Cathedral Road Chennai – 600086 Registration Number 18 - 006127 Corporate Identification Number

U74999TN1972PLC006127

Address of the Registrar of Companies : Office of the Registrar of Companies Shastri Bhawan No 16, Haddows Road Chennai 600 006 Board of Directors of the Company SL NO NAME

1. L Lakshman 2. L Ganesh 3. C Prabhakar 4. R Jagannath 5. Subodh Kumar Bhargava 6. Ashok Malhotra

For further details on the Board of Directors of the company please refer the section titled “Management” at Page 23.

8

INFORMATION MEMORANDUM Company Secretary and Compliance Officer K Sankaranarayanan “Maithri” 132, Cathedral Road Chennai 600 086 Phone: + 91 44 2811 2472 Fax: +91 44 2811 2449 Email: [email protected] Bankers to the Company: Bank of Baroda New No. 70, Old No. 28, Rajaji Salai, Chennai – 600001

ICICI Bank Ltd. ICICI Bank Towers, 9th Floor, East Wing, 93, Santhome High

Road, Santhome, Chennai – 600 028

BNP Paribas Prince Towers, 3rd Floor, 25/26, College Road, Chennai – 600006

The Hongkong and Shanghai Banking Corporation Ltd.

Nagabrama Towers, No. 76, Cathedral Road, Chennai – 600086

HDFC Bank Ltd. Mariam Center, 3rd Floor, No. 751-B, Anna Salai, Chennai – 600 002

Standard Chartered Bank No. 19, Rajaji Salai, 5th Floor, Chennai – 600 001

Auditors of the company: M/s Brahmayya & Co Chartered Accountants No.48, Masilamani Road Balaji Nagar, Royapettah Chennai 600 014 CAPITAL STRUCTURE:

A. Pre Scheme of Arrangement Amount (Rs.)

A. Authorised Capital 90,000 Equity Shares of Ra.10/- each 10,000 Preference Shares of Rs. 10/- each

900,000 100,000

Total 1,000,000 B. Issued, Subscribed and paid up capital 51,000 Equity Shares of Rs.10/- each

510,000

Total 510,000 B. Post Scheme of Arrangement

Amount (Rs.) A. Authorised Capital

10,000,000 Equity Shares of Ra.10/- each

100,000,000

Total 100,000,000 B. Issued, Subscribed and Paid-up Capital

5,150,992 Equity Shares of Ra.10/- each fully paid-up

51,509,920

Total 51,509,920

9


1. The authorized share capital of the company at the time of incorporation was Rs.1,000,000/-

divided into 90,000 equity shares of Rs.10/- each and 10,000 9.3% cumulative redeemable preference shares of Rs.10/- each.

2. The authorized capital was increased from Rs. 1,000,000/- to Rs.100,000,000/- divided

into10,000,000 Equity Shares of Rs.10/- each in terms of Clause 20.6 of the Scheme sanctioned by the High Court of Judicature at Madras.

Notes to Share Capital Structure:

1. Share Capital History of the Company

Sl No Date of Allotment

Nature of Issue

Consideration

No of shares

Face Value (In Rs)

Issue Price (In Rs.)

Share Premium

Cumulative Paid up Share Capital (Nos.)

1 09.03.1972 Subscription to MoA

70 10 700 NIL 70

2 20.04.1973 Further issue 930 10 9300 NIL 1,000 3 10.01.2002 Preferential

Issue

Cash 50,000 10 500,000 NIL 51,000

In terms of the Scheme of Demerger, Merger and Amalgamation the company has allotted 5,150,992 equity shares of Rs.10/- each fully paid-up to the equity shareholders of erstwhile Rane Engine Valves Limited, on February 28, 2008.

2. As per clause 22.4 of the scheme, the entire pre issue share capital held by the REVL stands cancelled. In terms of Clause 8.3.5.1 (vii) of the SEBI (DIP) Guidelines, 2000, 1,030,199 equity shares of the Demerged Company 1 which was locked-in upto December 31, 2008 would continue to be locked-in for the same period in the company. Further, pursuant to clause 8.3.5.1(viii) of SEBI (DIP) Guidelines, 2000, 20% of the post scheme paid up capital held by the promoters, are subject to lock in for a period of three years i.e. upto April 30, 2011.

3. The list of equity shareholders of the company and the shares held by them is as follows:

(a) Details of Top Ten Shareholders after the date of allotment to the date of filing this

Information Memorandum are as follows:

Sl No Name of the Shareholder No of Shares % to the Paid up capital

1. Rane Holdings Limited 2,284,898 44.36 2. Rane Investments Limited 372,387 7.23 3. TRW Automotive J V LLC 504,000 9.78 4. Enam Capital Private Limited 201,890 3.92 5. Narayanamma M M 83,280 1.62 6. The Oriental Insurance Company

Limited 52,775 1.02

7. Chitra Venkataraman 49,772 0.97 8. B Dharani 47,041 0.91 9. United India Insurance Company

Limited 46,342 0.90

10. Bhargavi Devi B 45,408 0.88

10


(b) Details of Top Ten Shareholders two years prior to the date of this Information Memorandum:

Sl No Name of the Shareholder No of Shares % to the Paid up capital

1. Rane Engine Valves Limited 25,000 49.02 2. Rane Brake Linings Limited 25,000 49.02 3. Harish Lakshman 200 0.39 4. Meenakshi Ganesh 150 0.29 5. Prasanna Aghoram 150 0.29 6. Pushpa Lakshman 150 0.29 7. Vanaja Aghoram 150 0.29 8. Aditya Ganesh 75 0.15 9. Aparna Ganesh 75 0.15 10. Vinay Lakshman 50 0.10

4. As on the date of this Information Memorandum, there are no outstanding warrants, options or rights to

convert debentures, loans or other instruments into equity shares of the Company.

5. The promoters of the company have not traded in the shares of the company during the six months preceding the date on which the information memorandum is filed with the Board.

6. None of the directors or key management personnel of the company other than those mentioned below

hold shares in the company Name of the Director / Key Management Personnel

Shares Percent to total capital

L Ganesh 50 0.00% L Lakshman 50 0.00% C Prabhakar 19,634 0.38%

7. The shareholding pattern of the company before and after the scheme is as follows:

Pre Scheme Post scheme Cate-gory code

Category of shareholder No of Shares % to Paid ip

Equity capital No of Shares % to paid up

cquity capital (A) Shareholding of Promoter

and Promoter Group[2]

1 Indian (a) Individuals/ Hindu

Undivided Family 1,000 1.96 3,287 0.06

(b) Central Government/ State Government(s)

- - - -

(c) Bodies Corporate 50,000 98.04 2,657,285 51.59 (d) Financial Institutions/ Banks - - - - (e) Any Other (specify) - - - - Sub-Total (A)(1) 51,000 100.00 2,660,572 51.65 -2 Foreign (a) Individuals (Non-Resident

Individuals/ Foreign Individuals)

- - - -

(b) Bodies Corporate - - - -

11


Cate-gory code

Category of shareholder Pre Scheme Post scheme

No of Shares % to Paid ip Equity capital

No of Shares % to paid up cquity capital

(c) Institutions - - - - (d) Any Other (specify) - - - - Sub-Total (A)(2) Total Shareholding of

Promoter and Promoter Group (A)= (A)(1)+(A)(2)

51,000 100.00 2,660,572 51.65

(B) Public shareholding[3] 1 Institutions (a) Mutual Funds/ UTI - - - - (b) Financial Institutions/ Banks - - 6,318 0.12 (c) Central Government/ State

Government(s) - - - -

(d) Venture Capital Funds - - - - (e) Insurance Companies - - 122,607 2.38 (f) Foreign Institutional

Investors - - - -

(g) Foreign Venture Capital Investors

- - - -

(h) Any Other (specify) - - - - Sub-Total (B)(1) 128,925 2.50 2 Non-institutions (a) Bodies Corporate - - 290,633 5.64 Individuals - (b) i. Individual shareholders

holding nominal share capital up to Rs. 1 lakh.

- - 1,073,989 20.85

ii. Individual shareholders holding nominal share capital in excess of Rs. 1 lakh.

- - 492,873 9.57

(c) Any Other - i. Foreign Collaborator - - 504,000 9.78 Sub-Total (B)(2) 2,361,495 45.85 Total Public Shareholding

(B)= (B)(1)+(B)(2) - - 2,490,420 48.35

TOTAL (A)+(B) 51,000 100.00 5,150,992 100.00 (C) Shares held by Custodians

and against which Depository Receipts have been issued

- - - -

GRAND TOTAL (A)+(B)+(C)

51,000 100.00 5,150,992 100.00

12


8. Details of shares held by our Promoters and Promoters Group:

Promoter No.of Shares % to paid-up Capital

Lock-in

Rane Holdings Limited 2,284,898 44.36 2,060,398

Rane Investments Limited 372,387 7.23 N.A

Lakshman L 50 0.00 N.A

Harish Lakshman 50 0.00 N.A

L Ganesh 50 0.00 N.A

Promoter Group No.of Shares % to paid-up Capital

Lock-in

Sumant Narayan 1,524 0.27 N.A

Suchitra Narayan 1,124 0.02 N.A

Chitra Sundaresan 189 0.00 N.A

Vinay Lakshman 50 0.00 N.A

Pushpa Lakshman 50 0.00 N.A

Meenakshi Ganesh 50 0.00 N.A

Malavika Lakshman 50 0.00 N.A

Aparna Ganesh 50 0.00 N.A

Aditya Ganesh 50 0.00 N.A

The entire share capital held by the promoters was allotted under the Scheme. In terms of Clause 8.3.5.1 (vii) of the SEBI (DIP) Guidelines, 2000, 1,030,199 equity shares of the Demerged Company 1 which was locked-in upto December 31, 2008 would continue to be locked-in for the same period in the company. Further, pursuant to Clause 8.3.5.1(viii) of SEBI (DIP) Guidelines, 2000, 20% of the post scheme paid up capital held by the promoters, are subject to lock in for a period of three years i.e. upto April 30, 2011.

9. There has been no further issue of capital whether by way of issue of bonus shares, Preferential

allotment, rights issue or in any other manner during the period commencing from the date of approval of the Scheme by the High Court viz., December 20, 2007. Also there will be no further issue of capital whether by way of issue of bonus shares, Preferential allotment, rights issue or in any other manner till listing of the Equity Shares allotted as per the Scheme except as provided under the Scheme.

10. The Company presently does not have any intention or proposal to alter its capital structure for a period

of six months from the date of listing the shares, by way of split/consolidation of the denomination of Equity Shares or further issue of Equity Shares (including issue of securities convertible into exchangeable, directly or indirectly for Equity Shares) whether preferential or otherwise except as provided under the scheme.

13


i. There shall be only one denomination for the Equity Shares of the Company, subject to applicable regulations and the company shall comply with such disclosure and accounting norms specified by SEBI, from time to time.

ii. The Company has 4,307 members as on February 28, 2008.

V. OBJECTS OF THE SCHEME OF DEMERGER, MERGER AND AMALGAMATION: The Scheme of Arrangement resulted in complete elimination of cross holdings among Rane Group Companies with the consolidation of group company investments held by erstwhile Rane Engine Valves Limited (Demerged Company 1) and erstwhile Rane Brake Linings Limited (Demerged Company 2) into Rane Holdings Limited (RHL).

The present restructuring scheme is aimed at elimination of residual cross holdings, for consolidation of Rane Group’s investments through Rane Holdings Ltd. (RHL) with the following resultant benefits : (a) Enhancing the shareholders value by unlocking the hidden value through elimination of cross holdings. (b) Consolidation of group’s results in RHL. (c) Minimizing the cascading effect of the dividend tax. A. The Main Features Of The Scheme The present restructuring scheme is aimed at elimination of residual cross holdings, for consolidation of Rane Group’s investments through Rane Holdings Ltd. (RHL). The steps undertaken in this composite scheme of demerger, merger and amalgamation are : De-merger of the manufacturing undertaking of Demerged Company 1 into the company viz., Techcons

Ltd. (renamed as Rane Engine Valve Limited through the scheme).

De-merger of the manufacturing undertaking of Demerged Company 2 into a separate company –Rane Brake Products Ltd. (renamed as RBL through the scheme).

Merger of the residual non-manufacturing businesses of Demerged Company 1 and Demerged Company 2, consisting of mainly investments in Rane Companies, into RHL.

The “Appointed Date” is 1st April 2007.

The present shareholders of Demerged Company 1 and Demerged Company 2 have been allotted shares in REVL and RBL at 1:1 ratio i.e. they will allotted one share in the resulting companies for every one share held in the respective demerged companies as on the record date viz., February 22, 2008.

In addition, for the merger of the non-manufacturing businesses of the Demerged Company 1 and Demerged Company 2, RHL has allotted on February 28, 2008 shares in the following ratio :-

56 shares in RHL for every 100 shares held in Demerged Company 1,

75 shares in RHL for every 100 shares held in Demerged Company 2

14

INFORMATION MEMORANDUM STATEMENT OF TAX BENEFITS : The following tax benefits shall be available to the Company and to the shareholders under the current Direct Tax Laws as certified by the statutory auditors M/s. Brahmayya & Co. vide their letter dated March 17, 2008: BENEFITS AVAILABLE UNDER THE INCOME TAX ACT, 1961 (“the IT Act”): I. Benefits available to the Company The Company will be entitled to deduction under the sections mentioned hereunder from its total income chargeable to Income Tax.

1. Subject to fulfillment of conditions, the Company will be eligible, inter alia, for the following specified

deductions in computing its business income:-

Subject to compliance with certain conditions laid down in Section 32 to the IT Act, the company will be entitled to deduction for depreciation:

i. In respect of tangible assets and intangible assets in the nature of know-how, patents,

copyrights, trademarks, licenses, franchises or any other business or commercial rights of similar nature acquired on or after 1st day of April, 1998 at the rates prescribed under the Income Tax Rules, 1962;

ii. In respect of new machinery or plant which has been acquired and installed after 31st

March 2005 for manufacturing facilities a further sum of 20% of the actual cost of such machinery or plant as additional depreciation in the year in which the new plant and machinery is first put to use.

2. As per the provisions of section 35DDA of the I T Act, any expenditure incurred in any previous year

by way of payment of any sum to an employee in connection with his voluntary retirement, in accordance with any scheme or schemes of voluntary retirement, 1/5th of the amount so paid shall be deducted in computing the profits and gains of the business for that previous year, and the balance shall be deducted in equal installments for each of the four immediately succeeding previous year.

II. Benefits available to resident shareholders

1. Under section 10(34) of the IT Act, income by way of dividends referred to in Section 115-O of the IT Act received on the shares of the Company is exempt from income tax in the hands of shareholders.

2. (a) The long-term Capital Gains accruing to the members of the Company on sale of the

Company’s shares in a transaction entered into in a recognized stock exchange in India, and where such transaction is chargeable to Securities Transaction Tax, shall be exempt from tax as per provisions of section 10(38) of the IT Act.

(b) The short-term Capital Gains accruing to the members of the Company on sale of the

Company’s shares in a transaction entered into in a recognized stock exchange in India, and where such transaction is chargeable to Securities Transaction Tax, tax will be chargeable @ 10% plus applicable surcharge and education cess as per provisions of section 111A of the IT Act. It is proposed by the Finance Bill, 2008 the above rate of 10% will be increased to 15% effective from April 1, 2008.

(c) As per the provisions of section 74 of the IT Act, any short-term capital losses suffered by the

members of the Company on transfer of shares can be set off against the short term/long term capital gain earned in that year or can be carried forward for eight assessment years from the

15

INFORMATION MEMORANDUM year in which the loss was incurred, subject to the fulfillment of conditions specified in those sections.

(d) As per the provisions of Section 112 of the IT Act, long term gains accruing to the members

of the Company from the transfer of shares of the Company, otherwise than as mentioned in point 2(a) above, shall be charged to tax - @ 20% (plus applicable surcharge and education cess) after deducting from the sale proceeds the indexed cost of acquisition or – 10% (plus applicable surcharge and education cess) after deducting from the sale proceeds the cost of acquisition without indexation.

(e) The members are entitled to claim exemption in respect of tax on long term capital gains

under section 54EC of the IT Act, if the amount of capital gains is invested in certain specified bonds / securities subject to the fulfillment of the conditions specified in those sections.

(f) Individuals or HUF members can avail exemption under section 54F of the IT Act by

utilization of the sales consideration for purchase / construction of a residential house within the specified time period and subject to the fulfillment of the conditions specified therein.

3. Section 88E of the IT Act provides that where the total income of a person includes income chargeable

under the head “Profits and gains of business or profession” arising from purchase or sale of an equity share in a company entered into in a recognised stock exchange, i.e., from taxable securities transactions, he shall get rebate equal to the securities transaction tax paid by him in the course of his business. Such rebate is to be allowed from the amount of income tax in respect of such transactions calculated by applying average rate of income tax. It is proposed in the Finance Bill, 2008, the above scheme of tax rebate will be replaced by the scheme of deduction as business expenditure under section 36(xv) of the IT Act against income under the head Profits and Gains of Business arising on the business of purchase and sale of securities.

III. Benefits available to Non-Resident shareholders

1. Dividends (whether interim or final) declared, distributed or paid by the Company are exempt in the hands of shareholders as per the provisions of Section 10(34) of the IT Act.

2. Under the provisions of section 90(2) of the IT Act, if the provisions of the Double Taxation

Avoidance Agreement (DTAA) between India and the country of residence of the non- resident are more beneficial, then the provisions of the DTAA shall be applicable.

a. Non Resident Indians (as defined in section 115C (e) of the IT Act), being shareholders of an

Indian Company, have the option of being governed by the provisions of Chapter XII-A of the IT Act, which interalia entitles them to the following benefits in respect of income from shares of an Indian Company acquired, purchased or subscribed to in convertible foreign exchange. As per the provisions of section 115 E of the IT Act, and subject to the conditions specified therein, long-term capital gains arising on the transfer of Company’s shares will be charged to income Tax @ 10% (plus applicable surcharge and education cess). However, long-term Capital Gains accruing to the members of the Company on sale of the Company’s shares in a transaction entered into in a recognized stock exchange in India, and where such transaction is chargeable to Securities Transaction Tax, shall be exempt from tax as per provisions of section 10(38) of the IT Act.

3. (a) As per the provisions of Section 115G of the IT Act, Non-Resident Indians are not

obliged to file a return of income under Section 139(1) of the Act, if their only source of income is eligible investment income or long term capital gains, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the Act.

(b) Under Section 115H of the IT Act, where the Non-Resident Indian becomes assessable as a

resident in India, he may furnish a declaration in writing to the Assessing Officer, along with

16


his return of income for that year under Section 139 of the IT Act to the effect that the provisions of the Chapter XII-A shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until transfer or conversion of such assets into money.

(c) As per the provisions of Section 115-I of the IT Act, a Non-Resident Indian may elect not to

be governed by the provisions of Chapter XII-A for any assessment year by furnishing his return of income for that assessment year under Section 139 of the ITAct, declaring therein that the provisions of Chapter XII-A shall not apply to him for that assessment year and accordingly his total income for that assessment year will be computed in accordance with the other provisions of the IT Act.

(d) As per the provisions of section 115F of the IT Act and subject to the fulfillment of the

conditions specified therein, the Long Term Capital Gains arising on the transfer of Company’s shares shall be exempted from income tax entirely / proportionately if all or a portion of the net consideration is invested within 6 months of the date of transfer in specified asset as defined in section 115C (f) or any savings certificates referred to in section 10(4B) of the IT Act. The amount so exempted shall, however, be chargeable to tax as long term capital gains under the provisions of section 115F (2) if the specified assets are transferred or converted in to money within 3 years from the date of acquisition as specified in the said section.

IV. Benefits available under the Wealth-tax Act, 1957

Shares of company held by the shareholder will not be treated as an asset within the meaning of section 2(ea) of Wealth Tax Act, 1957. Hence no Wealth Tax will be payable on the market value of shares of the Company held by the shareholder of the company.

V. Benefits available under The Gift Tax Act, 1958

GIFT TAX IS NOT LEVIABLE IN RESPECT OF ANY GIFTS MADE ON OR AFTER 1 OCTOBER, 1998. THEREFORE, ANY GIFT OF SHARES OF THE COMPANY WILL NOT ATTRACT GIFT TAX.

Notes: 1. Tax benefits available to the company and to the shareholders under the current tax laws presently in force

in India. Several of these benefits are dependent on the company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Shareholders are advised to consider in their own cases, the tax implications of any new enactments which may change / modify the law.

2. In view of the nature of tax consequences, being based on all the facts, in totality, of the investors, each

investor is advised to consult his/her tax advisor with respect to specific tax consequences. 3. All the above benefits will be available only to the first named holder in case of the shares held by joint

holders.

17


SECTION IV- ABOUT THE COMPANY

DETAILS OF THE BUSINESS OF THE ISSUER COMPANY : The company is engaged in the business of manufacturing and marketing of Valves, Valve Guides and Valve Tappets for IC engines and related auto components. Products of the Company are : Valves Guides Tappets

Infrastructure facilities for raw materials and utilities like water, electricity, etc. The raw material used for manufacture of Valves is Valve Steel Bars. Some grades are manufactured in India and the rest is imported mainly from Japan. There is no shortage of raw material availability both in the domestic and the import front. Connected load is being provided by respective State Electricity Boards. Apart from this the company also has 100% back up Genset facilities in order to take care of any power failure. REVL currently has the following manufacturing facilities

PLANT LOCATIONS Products 1. “Glendale”, 5, Noble Street, Post Box No.1305, Alandur, Chennai –

600 016 Valves

2. Plot Nos. 68 to 77, Industrial Estate, Medchal – 501 401, RR District, AP Valves

3. Post Box No.4, Redhills Road, Madhavaram, Ponneri – 601 204 Guides & Tappets 4. Survey No. 177/20, Hyderabad – Vikarabad Road, Aziz Nagar –

500 075, RR District AP Valves

5. Survey No. 110-111, Seniapatti, Kasavanur Village, Iluppur Taluk, Pudukottai District 621 316, Tamilnadu Valves

Employee Strength

Category Number Managerial & Supervisory 349 Workers 1086

Intellectual Property Rights

• The Trade Mark “EVL” in the stylized form is owned by REVL. • REVL does not own any patents.

18

INFORMATION MEMORANDUM Manufacturing process of : Valves : The inlet valve is used to allow the income charge into the engine during the suction stroke. Exhaust valve used to allow the exhaust gases out of the engine during exhaust stroke. Both the valves close the combustion chamber during the rest of the cycles. The valve movement is constrained by a valve guide. The seat inserts provide the seating surface for the valves to seal the combustion chamber. The opening and closing of the valves are controlled according to the valve timing by the camshaft, which gets drive from the crankshaft. The valve train components and the mechanical load for the inlet and exhaust valves remains similar whereas the operating environment of both the valves differ which make the design considerations different for inlet and exhaust valves. The inlet valve is always cooled by the incoming charge in the inlet port so it operates at a lesser temperature. The exhaust valve is always surrounded by the hot gases and hence operates at a high temperature. The design department considers the above functional requirements during the design of valves. The valves are manufactured through forging, Heat treatment and machining route. High precision dimensions like stem diameter, Seat height and seat Runout are maintained through the grinding process. Plant & Machinery The following are the major plant & machinery used in the manufacture of the products:- − WMW Centreless Grinder − Upsetters − Friction Welder − Lindburg Furnace − Celoria Automatic Lathe − Automatic Centreless Grinder − PTA Deposit Machine Nature of the products – consumer/ industrial and end users

Sector % to 2006-07

Users

OEMs 56.00 Industrial consumers like Maruti Udyog Ltd., Tata Motors, Hero Honda, Hyundai

Replacement 11.00 Engine builders and Re borers Export 33.00 Industrial consumers, Engine builders and Reborers

Competition

Manufacturers Installed capacity (Nos.’000)

Sales (Nos.’000)

REVL* 35,020 31,196 Shriram Piston & Rings Limited*

14,840 15,260

KML* 8,000 7,901 Source: * Published Annual Report of the Company for the year 2006-07

19


Approach to marketing and proposed marketing set up

Sector Market approach Market set up OEM Direct Full fledged team looking into each customer

requirement and headed by Manager Marketing (OEMs)*

Replacement Through Representatives/Stockist/ Reborrowers

Sales representatives in all states to generate orders. Apart from these representatives there are 4 Zonal Heads who, in turn, report to Senior Manager Marketing (Replacement)*

Export - OEMs Direct Commission agent Export- Replacement.

Through Commission Agent/Stockist/Reborers

Through authorized agents / representatives present all over the world who, in turn, report to Senior Manager Marketing (Exports)*

* All these Managers, in turn, report to General Manager (Marketing) Export possibilities and export obligations, if any REVL has been exporting Valves to developed countries for well over four decades. With this, along with the current recognition of Indian Engineering goods in the international market, REVL expects to have a good export potential in the years to come. Export obligations, if any, shall be limited to those arising on account of import of raw materials for such exports and import of capital goods under EPCG Scheme. Business strategy a. Business strategy. The company’s strategy for growth is through increase of volumes to OEMs both domestic and exports. b. Future prospects The company has been exporting Valves to developed countries from 1963 and as mentioned above, REVL expects to have a good export potential in the years to come. The company has been servicing domestic OEM’s for decades and is expected to continue in the years to come. c. Capacity & Capacity Utilisation: Valves

Qty in ‘000s Past three years Installed

Capacity Production % Capacity utilizaton

Proposed FY 2007-08 39,450 30,980 78.53% FY 2006-07 35,020 31,364 89.56% FY 2005-06 32,000 27,937 87.30% FY 2004-05 28,000 26,048 93.03%

Guides


Capacity Production % Capacity utilizaton


20

INFORMATION MEMORANDUM Tappets


Capacity Production % capacity utilizaton


HISTORY AND CORPORATE STRUCTURE OF THE REVL HISTORY OF THE COMPANY The Company having its registered office at “Maithri”, 132, Cathedral Road, Chennai – 600 086, Telephone 044 28112472, Fax: 044 28112449 was incorporated on 09.03.1972 as a public limited company as “Techcons Limited”. The main object of the company was to carry on the business of consultancy services within the Rane Group. The shareholders of the company had earlier approved the transfer of the entire undertaking with effect from April 1, 2006 on a going concern basis to Rane Holdings Limited, at their extra-ordinary general meeting held on March 31, 2006. The transfer was consequent to the restructuring exercise undertaken by the Rane Group at its first phase during the year 2004-05. The company during September 2007 amended its Objects and Capital clauses in its Memorandum of Association to facilitate carrying on of manufacturing of inlet and exhaust valves, valve guides and valve tappets for I.C. engines. Pursuant to the Order of the High Court, on December 20, 2007 the company took over the manufacturing undertaking of REVL with effect from April 1, 2007 (appointed date). The principal business of the company is manufacture of inlet and exhaust valves, valve guides and valve tappets for I.C. engines. In terms of the Scheme of demerger, merger and amalgamation, the name of the company was changed from “Techcons Limited” to “Rane Engine Valve Limited” with effect from February 6, 2008 . a. Main Objects of the Company The main objects of the company as set out in the Memorandum of Association are as follows: a. To establish and carry on business as manufacturers of automotive ancillary products, tools, machine tools

and machine tool ancillaries. b. To carry on all kinds of engineering work, including electrical, mechanical, structural and general

engineering, to act as structural and general fabricators and metal workers and metal finishers. c. To undertake all kinds of metal finishing such as grinding, machining, welding, riveting, forging, bolting,

soldering, brazing, metal powdering, metal spraying, electroforming, electroplating, hot and electro-galvanising, oxidising, anodising, lacquering finishing and polishing, enamelling, thermoplastic coating, metallizing, and engraving.

d. To establish and work heat treatment shops, smithy and press shops, forging shops, tool rooms, drop

stamping works, to manufacture and deal in transmission line materials and structural materials. e. To act as consultants and advisers for all kinds engineering work carried on by the Company.

21


f. To carry on business as tool makers, mill wrights, machinists, to manufacture deal in and assemble various kinds of tools, small tools, machine tools, machine tools accessories and spare parts, implement dies, patterns, jigs fixtures, designs, moulds and punches.

g. To carry on the business of manufacturers of and dealers in engine valves, all automobile components,

machinery spares (partly or fully finished) for all types of engines, whether stationary, automobile, marine, aircraft, locomotives or others, spare parts for all types of machines, automobiles including tools and accessories for all types of moveable or stationary engines of machines, accessories and fittings for motor vehicles, railways, aeroplanes, hydroplanes, ships, motor cycles, scooters, bicycles and carriages and all articles and things used in or capable of being used in connection with the manufacture, maintenance and working of any of the foregoing.

Changes to Memorandum of the company:

Date Particulars 31.01.1995 Amendment to Objects Clause to enable the company to carry on the business of training

and development in technical, managerial, marketing, engineering, quality and such other fields.

24.09.2007 Amendment to Objects Clause to enable the company to carry on the business of manufacturing and marketing of engine valves, guides and tappets.

Information on Collaborators including providing marketing assistance REVL has obtained process and product technology for the products detailed below from different collaborators. 1. TRW Automotive U.S.LLC, USA − Product – Valves − place of registration - State of Delaware, USA − general information regarding such persons relevant to the issuer - Technical Collaborator 2. Bosch Automotive Systems Corporation, Japan − Product – Actuators for clutches − place of registration - Tokyo, Japan − general information regarding such persons relevant to the issuer - Technical

Collaborator The technology has been fully absorbed. Milestones / Major Events Certain key events in the history of manufacturing undertaking of erstwhile rane engine valves limited now forms part of the milestones of revl. They are as follows:-

1. One of the leading manufacturers of valve train components in India. 2. Has multi locational plants. 3. First indigenous supplier of valves to Maruti Udyog Ltd. 4. The current product range also includes other valve train components – Guides and Tappets. 5. Applications span from portable generator to large engines for power generation and marine use.

22


6. REVL is one of the earliest exporters of auto components from India. Importing countries include Australia, UK, Germany, Italy, Iran, USA, Middle East and the Far East. REVL’s Overseas OE customers include reputed engine and tractor manufacturers.

7. Winner of National Award for quality instituted by Automotive Components Manufacturers

Association of India ( ACMA) for the year 1992-93. 8. Winner of the “Best Vendor Award” in the machined components category from India’s leading car

manufacturer –Maruti Suzuki for four years 1992-93, 1995-96, 1996-97 and 1998-99. 9. Winner of ACMA Certificate of Merit for Excellence in Exports for 1997-98. 10. Consistent Excellent / Outstanding Vendor Rating by major customers in India and abroad. 11. “Ship to Use” status granted by many OEMs. 12. Certified “Star Export House” status by Government of India in recognition of Excellence in Exports. 13. A QS 9000 certified company. 14. ISO 14001 certification obtained in November 2001. 15. TS16949 certification obtained in July 2004

16. Deming Prize for Total Quality Management, from Union of Japanese Scientists and Engineers won

during November 2005. b. The issuer company does not have any subsidiary. OUR MANAGEMENT Board of Directors and Management The composition of the Board is given below:

Promoter Group:

Mr. L Ganesh, Chairman & Managing Director Mr. L Lakshman (non-executive director)

Independent & non- executive directors:

Mr. Ashok Kumar Malhotra Mr. C Prabhakar Mr. Subodh Kumar Bhargava Mr. R Jagannath

a. The following table sets forth details regarding the Board of Directors of the Company.

S.No. Name & Address Directors Profile 1 Mr.L Ganesh

Chairman & Managing Director S/o. Mr.L L Narayan Door No. 5A, Valliammai Achi Road, Kotturpuram Chennai 600 085

Mr. L Ganesh, aged 53 years, graduated from the MadrasUniversity and is an Associate Member of Institute of CharteredAccountants of India. He obtained a Masters Degree in BusinessAdministration from the Pennsylvania State University (USA)Joined as Management Trainee in erstwhile REVL in 1978, he heldvarious key positions like Commercial Manager, General Manager,Joint Managing Director and in 1990 he become ManagingDirector of erstwhile REVL. He is also closely involved in

23


S.No. Name & Address Directors Profile management of other companies in Rane Group and has 29 yearsof industrial experience. Mr. L Ganesh has become the Chairmanof the entire Rane Group during the month of October 2007.

2 Mr.L Lakshman Non-Executive Director S/o. Mr.L L Narayan 17 Crescent Street Off Arch Bishop Mathias Avenue Chennai 600 028.

Mr. L Lakshman, aged 61 years, graduated as a MechanicalEngineer and has done Executive MBA from London BusinessSchool. Mr. L Lakshman joined as a Management Trainee inerstwhile RBL in 1970 and held various operational and planningpositions in the group. From 1992 as Chairman of Rane GroupMr. Lakshman has been spearheading the business of the differentcompanies in Rane group and has more than 38 years of. industrialexperience.

3 Mr. Ashok Kumar Malhotra S/o. Mr.K C Kaifi Flat C-2, Regency Splendour, 25, Hall Road, Richards Town, Bangalore – 560 005 Chennai 600 028.

Mr. Ashok Malhotra, aged 58 years, is a B.A and holds a PostGraduate Diploma in Business Administration from IIM. He has arich experience of 34 years and currently he is working as aconsultant in the area of Human Resource Management.

4 Mr. C Prabhkar S/o Mr. C R Rao “Apsara” (New No.2), Satyanarayana Avenue Chennai – 600 028

Mr. C Prabhakar, aged 72 years is a graduate of Bachelor ofEngineering. Mr. C Prabhakar has a good exposure in the field ofauto management companies.

5 Mr. Subodh Kumar Bhargava S/o. late Mr. D P Bhargava A-15/1, DLF Phase – I, Gurgaon – 122 001

Mr. Subodh Kumar Bhargava, aged 65 years is a graduate ofBachelor of Engineering. Mr. S K Bhargava is a Chairman of theTata Communications Limited (formerly known as Videsh SancharNigam Limited) and has a rich expertise of 42 years in the field ofmanufacturing companies.

6 Dr. R Jagannath S/o. New No. 151, St. Mary’s Road, Chennai – 600 018

Mr. R Jagannath, aged 64 years is a graduate of Bachelor ofEngineering (Honors in Mechanical). Mr. R Jagannath was aDeputy Managing Director of Ashok Leyland Limited and has arich experience of over 43 years in the automotive industries.

b. Details of other directorships of the Board of Directors of the Company are as follows: S.No. Name & Address Other Directorship

1 Mr. L Ganesh 1. Kar Mobiles Limited - Chairman 2 Rane Brake Lining Limited - Chairman 3 Rane TRW Steering Systems Limited – Chairman 4. Rane NSK Steering Systems Limited – Chairman 5. Rane Holdings Limited – Vice Chairman 6. Rane Investments Limited 7. Rane (Madras) Limited 8. Rane Diecast Limited 9. JMA Rane Marketing Limited 10. EIH Associated Hotels Limited 11. EIH Limited

24

INFORMATION MEMORANDUM S.No. Name & Address Other Directorship

2 Mr.L Lakshman 1. Rane Holdings Limited – Chairman & Managing Director 2. Rane Brake Lining Limited 3. Rane TRW Steering Systems Limited 4. Rane NSK Steering Systems Limited 5. Rane Investments Limited - Chairman 6. Rane (Madras) Limited 7. JMA Rane Marketing Limited 8. Kar Mobiles Limited 9. Pricol Limited 10. Force Motors Limited

3 Mr. Ashok Kumar Malhotra 1. Cognan Consulting Pvt. Ltd. 2. VI e Trans Pvt. Ltd.

3. Sumedhas Academy for Human Context – (Section 25

company) 4 Mr. C Prabhakar Nil

5 Mr. Subodh Kumar Bhargava 1. Wartsila India Limited – Chairman

2. Tata Communications Limited - Chairman 3. Tata Steel Limited 4. Samtel Color Limited 5. TRF Limited 6. Carborandum Universal Limited 7. Glaxo Smithkline Consumer Healthcare Limited 8. Batliboi Limited 9. SRF Limited 10. Power Finance Corporation Limited 11. VSNL Singapore PTE. Ltd. - Chairman 12. Larsen and Toubro Limited

6 Mr. R Jagannath Accuspeed Engineering Limited c. Compensation of Managing Director : Pursuant to the Scheme, the service rendered by the Managing Director of the Demerged Company 1 has been transferred to the company. The terms of remuneration are as approved by the shareholders of the Demerged Company 1. The elements of remuneration payable to Managing Director include basic salary, allowances, perquisites and retirement benefit (all fixed) and commission not exceeding 24 months salary subject to limits as prescribed under the Companies Act, 1956. No sitting fess would be paid to Managing Director. The employment of the Managing Director is contractual. There is no severance fee payable to him. There is no Stock Option Scheme prevailing in the company. d. Compliance with Corporate Governance Norms : The provisions of the Listing agreement will become applicable to the company upon listing of its equity shares in MSE, NSE and BSE.

25


The company is compliant with the provisions of Clause 49 of the listing agreement. The Board of Directors of the company at their meeting held on February 6, 2008 constituted the Audit Committee and Investors Service Committee. The cornerstone of the philosophy of Governance adopted by the Board has at all times been based on integrity, transparency and fairness in all its dealings. The company will continue to seek enhancement to shareholder value within the framework of business ethics, regulatory compliances and contribution to society. The Rane Group has a clearly defined policy document titled “Ethical Standards of Behaviour” that defines obligations of each of its employees to the company expectations of value driven behaviour. The constitution of the various committees is given below:

A) Audit Committee: 1. Mr S K Bhargava - Chairman (Independent Director) 2. Mr. C Prabhakar - Member (Independent Director) 3. Mr. R Jagannath - Member (Independent Director) 4. Mr.L Lakshman - Member (Non Executive Director) Mr K Sankaranarayanan, Secretary would act as the Secretary of the Audit Committee. B) Investor Services Committee: 1. Mr L Lakshman - Chairman (Non Executive Director) 2. Mr L Ganesh - Member(Executive Director) 3. C Prabhakar - Member (Non-Executive Director) Mr K Sankaranarayanan, Secretary would act as the Compliance officer of the company.

The role, powers and functions of the Audit Committee and Investor Services Committee are as per Clause 49 of the listing agreement, the applicable provisions of the Companies Act, 1956 and Code of Conduct formulated by the Board of Directors of the company. e. Shareholding of directors None of the directors other than the following hold any shares in the company

Name of the director Shares held % L Lakshman 50 0.00 L Ganesh 50 0.00 C Prabhakar 19,634 0.38

f. Interest of the Directors Other than their respective shareholding in the Company and re-imbursement of expenses incurred and normal remuneration/sitting fee from the Company as stated above, the directors of the Company have no other interest in the Company. g. Changes in the Board during the last three years Name of the Director Date of Appointment Date of Change Reasons S K Bhargava 06.02.2008 Appointed as additional director Ashok Kumar Malhotra 06.02.2008 Appointed as additional director R Jagannath 06.02.2008 Appointed as additional director C Prabhakar 06.02.2008 Appointed as additional director A P Ramakrishnan 06.02.2008 Ceased to be a director due to

personal reasons

26

INFORMATION MEMORANDUM h. Management Organisation Structure

L Ganesh - Chairman &

Managing Director

G Ramkumar - President

T R R Sriram, GM Operations – Plant 1

Y Gopala Rao, Dy. GM - Operations Plant 2

B Sundararajan – VP Product Engineering & Corporate Quality

Suresh K Srinivasan – GM Marketing

K Sankaranaray nan – GM Finance & Secretary

a

S Krishnan Iyer – GM operations Plant 5

A Bazskar Raj – DGM Operations Plant 3

N K A Madubhalan – GM Operations Plant 4

A C Joseph Chandran – GM HRD

P Kumar – GM Materials

27


i. Key Managerial Personnel and Managerial Competence

The overall management is vested in the Board of Directors, comprised of qualified and experienced persons. The day-to-day affairs of the Company are looked after by a team of qualified professionals in various disciplines. As per the Scheme, all the employees of the Demerged Company 1 who were in its employment on the effective date of the scheme viz., February 6, 2008 shall as from such date, became the employees of the Company on the basis that their services have not been interrupted by the vesting of the undertaking of the Demerged Company 1.

Accordingly details of Key Managerial Personnel being transferred from the transferor company are as follows Mr. Ram Kumar G (DOJ 01.01.2008) Mr. Ram Kumar G, 56 years, President, holds a degree in Masters of Business Administration and Bachelor of Engineering. He has industrial experience spanning 30 years and has been associated with the Rane Group for the past 11 years. He has earlier worked with companies like Ashok Leyland Limited, Bharat Heavy Electricals Limited. Mr. Sundara Rajan B (DOJ 07.02.2002) Mr. Sundara Rajan B, 50 years, Vice President – Product Engineering & Corp. Quality, holds a degree in Masters of Business Administration, Masters of Technology and Bachelor of Technology. He has industrial experience spanning 26 years and has been associated with the Rane Group for the past 6 years. He has earlier worked with companies like Carborandum Universal. Mr.K Sankaranarayanan (DOJ 14.12.2006) Mr K Sankaranarayanan, 41 years, General Manager – Finance & Secretary, is a Chartered Accountant, Company Secretary and a Cost & Works Accountant. He has over 19 years of professional experience. He has earlier worked in various capacities with Tube Investments of India Limited, Thiru Arooran Sugars Limited, Fenner India Limited etc. Mr. Suresh K Srinivasan (DOJ 03.04.2006) Mr. Suresh K Srinivasan, 46 years, General Manager (Marketing) is an MBA. He has industrial experience of more than 20 years. He has worked in various companies like Nuclear Power Corporation Limited, Tube Investments of India Limited. Mr. P. Kumar (DOJ 06.07.2007) Mr. P Kumar, 41 years, General Manager (Materials) is an MBA, MSc and BE. He has industrial experience of more than 22 years. He has worked in various companies like Q-Flex Cables Limited, Royal Enfield etc. Mr. Joseph Chandran (DOJ 22.05.1998) Mr. Joseph Chandran, 59 years, General Manager – Human Resources, is a postgraduate in Personnel Management and Industrial relation. He has rich experience of 29 years in Human Resource and Industrial Relation in reputed organization like Flakt India Ltd., L&T Mechnell Ltd. and Hindustan Photo Film Manufacturing Co. Ltd. Mr. T R R Sriram (D.O.J 03.04.2006) Mr. T R R Sriram, 43 years, General Manager (Operations) is a postgraduate in Engineering Management. He has a total of 22 years experience. He has earlier worked in companies like I P Rings Limited, Reliance Energy and General Reflectors P Limited.

28

INFORMATION MEMORANDUM Mr. Y Gopala Rao (D.O.J 29.09.2006) Mr. Y Gopala Rao, 37 years, Deputy General Manager (Operations) is a graduate in Bachelor of Technology. He has a total of 15 years experience and has earlier worked in companies like Kusalava International Limited. Mr. Bazskar Raj (D.O.J 14.02.2005) Mr. Bazskar Raj, 47 years, Deputy General Manager (Operations) is an MBA and has graduated in Bacherlor of Engineering. He has earlier worked in companies like Wheels India Limited, TAFE etc and has a rich experience of over 25 years. Mr. Madhubalan NKA (DOJ 28.10.1995) Mr. Madhubalan NKA, 44 years, General Manager (Operations) is an Associate Member of Institute of Engineers. He has a rich experience of more than 25 years. He has worked in varied industries and companies like Sundram Fasteners Limited, Shriram Fuel Injection India etc. Mr. S Krishnan Iyer (DOJ16.12.2002) Mr. S Krishnan Iyer, 39 years, General Manager (Materials) is a Bachelor of Engineering in Industrial Engineering with a Diploma in Materials Management. He has a total experience of 18 years. He has earlier worked in companies like Eicher Tractors, Shriram Honda and Bhartia Cutler Hammer Ltd. Shareholding of the Key Managerial Personnel The Key Managerial Personnel do not hold any shares in REVL. Bonus or Profit sharing plan for the Key Managerial Personnel There is no bonus or profit sharing plan for the key managerial personnel. j. Interest of Promoters, Directors and Key Managerial Personnel Except as stated in “Related Party Transactions” and to the extent of shareholding in the Company, the Promoters do not have any other interest in our business. Except to the extent of their compensation and their shareholding or shareholding of companies they represent, the Directors, other than Promoter Directors, do not have any other interest in the Company. The key managerial personnel of the Company do not have any interest in the Company other than to the extent of the remuneration or benefits to which they are entitled to as per their terms of appointment and reimbursement of expenses incurred by them during the ordinary course of business and to the extent of the equity shares held by them in the Company, if any. k. Details of borrowing powers

Subject to the provisions of the Act, the Board of Directors of the company exercise their borrowing powers in accordance with the Articles of Association of the company. Pursuant to the resolution passed by the shareholders at their extra ordinary general meeting held on January 17, 2008, the Board has been authorized to borrow a sum not exceeding Rs.1,000 Million (apart from money borrowed as term loans and in the ordinary course of business) upon such terms and conditions as the Board may deem fit.

29


OUR PROMOTER The details of the promoters of the company are as follows : S.No

Name Address Qualifications Occupation/ Experience

1 Rane Holdings Limited

“Maithri”, 132, Cathedral Road, Chennai – 600 086

- Making and Holding investments in other group companies

2 Rane Investments Limited “Maithri”, 132, Cathedral Road, Chennai – 600 086

- Making and Holding investments in other group companies

3 L Lakshman No.17, Crescent Street, Off Arch Bishop Mathias Avenue, Abhiramapuram, Chennai – 600 028

B.E, Executive MBA from London Business School

Company Director with over 35 years of experience

4 L Ganesh Door No. 5A, Valliammai Achi Road, Kotturpuram, Chennai – 600 085

CA, MBA from Pennsylvania State University (USA)

Company Director with over 30 years of experience

5 Harish Lakshman G-B, #11, Prithvi Avenue, II Street, Teynampet, Chennai – 600018

BE, MSM from Purdue University

Company Director, 8 years of experience

6 Pushpa Lakshman No.17, Crescent Street, Off Arch Bishop Mathias Avenue, Abhiramapuram, Chennai – 600 028

M.A., Ph.D Housewife

7 Meenakshi Ganesh Door No. 5A, Valliammai Achi Road, Kotturpuram, Chennai – 600 085

M.A Housewife

8 Vinay Lakshman No.17, Crescent Street, Off Arch Bishop Mathias Avenue, Abhiramapuram, Chennai – 600 028

CA and has a degree in management

Company Executive

9 Aditya Ganesh Door No. 5A, Valliammai Achi Road, Kotturpuram, Chennai – 600 085

Graduate Student

10 Aparna Ganesh Door No. 5A, Valliammai Achi Road, Kotturpuram, Chennai – 600 085

B.Com, M.B.A

Student

11 Vanaja Aghoram 802, Ideal Home Township Kenchanahalli Bangalore 560 039 Phone No.: +91 44 28112472

Graduate Housewife

12 Sumant Narayan 132, Cathedral Road, Chennai – 600 086

MS, MBA Marketing Executive

13 Suchitra Narayan 132, Cathedral Road, Chennai – 600 086

BE, MBA Executive

14 Chitra Sundaresan 132, Cathedral Road, Chennai – 600 086

Graduate Housewife

30

INFORMATION MEMORANDUM 1. RANE HOLDINGS LIMITED

Rane Holdings Limited was incorporated on March 03,1936 as Rane (Madras) Limited and has its registered office at “Maithri”, 132, Cathedral Road, Chennai 600086. RHL was originally engaged in the manufacture and sale of automobile components. In addition the company was holding investments in various Rane Group Companies. The manufacturing business of the company was split and demerged into a new company under a scheme of arrangement approved by the High Court of Madras with effect from 1st July 2004. The surviving company, which retained the investments in the group companies, was renamed as Rane Holdings Limited. RHL is a listed entity with equity stakes held directly or indirectly in the various Rane group companies and its directors are Mr. L Lakshman, Mr. L Ganesh, Mr. Harish Lakshman, Mr. V Narayanan, Mr. Krishnan S Waran, Mr. P N Vencatesan, and Mr Shujaat Khan

The authorized share capital of the company is divided into 15,000,000 equity shares of Rs.10/- each and 5,000,000 13.5% Cumulative Redeemable Preference Shares of Rs.10/- each. Financial Information

(Rs.’000) Particulars March 31, 2007 March 31, 2006 March 31, 2005 Income 322,588 110,120 660,185 Profit after Tax 168,733 87,181 71,263 Paid up Equity Capital 97,813 81,313 81,313 Reserves (excluding revaluation reserves)

978,130 609,376 567,741

Earnings Per Share(EPS) 20.19 10.25 10.50 Net Asset Value (Per Share)

110.00 84.94 79.82

Listing RHL shares are listed in NSE, BSE and MSE. The monthly high & low closing price of RHL shares during the preceding six months is given below:

Month High (Rs.) Low (Rs.)

September 07 174.00 150.00October 07 174.00 152.90November 07 179.85 160.10December 07 232.80 168.25January 08 209.90 144.00February 08 176.80 131.10

Shareholding Pattern of the company after the allotment under the Scheme is as below :

Category No.of Shares Held % of shareholding Promoters 6,072,330 42.53 Public 8,205,479 57.47 Total 14,277,809 100.00

The company has not made any public or rights issue in the preceding three years. However, the Company has made a preferential allotment of shares to its promoters in February 2007. The company has not become a sick company within the meaning of the Sick Industrial Companies (Special Provisions) act, 1995 nor is under winding up.

31


2. RANE INVESTMENTS LIMITED

Rane Investments Limited, a wholly owned subsidiary of RHL, was incorporated as Glendale Investments Limited on December 15,1982. The name of the company was subsequently changed to RIL on May 20, 2002. The company’s principal business is directed towards investments in the Group companies. RIL holds 50% in Joint Venture company Rane TRW Steering Systems Limited and along with Rane Holdings Limited in Rane NSK Steering Systems Limited promoted by the Rane group. The authorized share capital of the company is divided into 1,00,000 equity shares of Rs.10 each. The shares of the company are not listed on any stock exchange. The Board of Directors of RIL comprises of Mr. L Lakshman, Mr L Ganesh, Mr. Harish Lakshman, Mr. Krishnan S Waran and Mr R Srinivasan. Financial Information

(Rs.’000) Particulars March 31, 2007 March 31, 2006 March 31, 2005 Income 245,235 134,380 124,755 Profit after Tax 237,557 119,355 112,149 Paid up Equity Capital 8,450 8,450 8,450 Reserves (excluding revaluation reserves)

327,351 272,861 219,767

Earnings Per Share(EPS) 281.13 141.25 132.72 Net Asset Value (Per Share)

397.40 332.91 260.08

Shareholding Pattern of the company

Category No.of Shares Held % of shareholding Promoters 845,000 100% Public - -

CURRENCY OF PRESENTATION In this Information Memorandum all references to “Rupees” or “Rs.” are to Indian Rupees, the legal currency of Republic of India, all references to “US $” or “$”or USD are to the legal currency of United States of America.

DIVIDEND POLICY The declaration and payment of dividends will be recommended by the Board of Directors and the shareholders, in their discretion, and will depend on a number of factors, including but not limited to the earnings, capital expenditure requirements and overall financial condition.

32

INFORMATION MEMORANDUM SECTION V FINANCIAL STATEMENTS

FINANCIAL STATEMENTS OF THE COMPANY

AUDITORS’ REPORT

TO THE BOARD OF DIRECTORS OF RANE ENGINE VALVE LIMITED (formerly known as ‘Techcons Limited”)

REPORT OF THE AUDITOR'S

The Board of Directors Rane Engine Valve Limited (formerly known as “Techcons Limited”) 132 Cathedral Road Chennai 600 086 Dear Sirs Auditor’s Report to the Board of Directors of Techcons Limited on the financial statements for the nine months ended December 31, 2007 1. We have audited the attached balance sheet of Techcons Limited as at 31st December 2007 and also the

profit and loss account and the cash flow statement for the period ended on that date annexed thereto. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those

Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by the company so

far as appears from our examination of those books;

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt

with by this report comply with the accounting standards issued by the Institute of Chartered Accountants of India;

(v) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto give a true and fair view in conformity with the accounting principles generally accepted in India:

33


(a) in the case of the Balance Sheet, of the state of affairs of the company as at 31st December 2007;

(b) in the case of the Profit and Loss Account, of the profit for the period ended on that

date; and (c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that

date. 4. This report is intended solely for your information and for inclusion in the Information Memorandum to be filed with the Stock exchanges and is not to be used, referred to or distributed for any other purpose. For Brahmayya & Co., Chartered Accountants (P.S.Kumar) Place: Chennai Partner Date: March 17, 2008 Membership No: 15590

34


PART A Financial information of REVL

Statement of Assets and Liabilities

STATEMENT OF ASSETS AND LIABILITIES

Rs. ' 000s Description 31.12.07 31.03.07 31.03.06 31.03.05 A Fixed Assets Gross Block 1,582,850 1,333 1,308 Less: Accumulated Depreciation 855,384 1,062 866 Net Block 727,466 - 271 442 Less: Impairment of Assets 1,600 - - Capital Work-in-Progress 213,968 - - Total 939,834 - 271 442 B Investments - - - C Deferred Tax Assets 537 643 D Current Assets, Loans & Advances Inventories 293,585 - - Sundry Debtors 323,862 - - Cash and Bank Balances 106,984 592 1,945 2,795 Other Current Assets - 66 66 Loans and Advances 345,907 - 1,176 712 Total 1,070,338 592 3,187 3,573 E Liabilities and Provision Loan Funds - - Secured 718,145 87 278 Unsecured 105,196 - - Total 823,341 - 87 278 F Deferred Tax Liability 55,333 - - - G Current Liabilities and Provisions Current Liabilities 326,793 10 1,310 1,868 Provisions - 4 2,035 - Total 326,793 14 3,345 1,868 H Net Worth (A+B+C+D-(E+F+G)) 804,705 578 563 2,512 I Represented by: Shareholder's Funds 1. Share Capital 51,510 510 510 510 2. Reserves 756,941 68 53 2,002 Less: 3. Miscellaneous Expenses 3,746 - - - 4. Balance in Profit and Loss Account - - - Net Worth (1+2-(3+4)) 804,705 578 563 2,512

35


STATEMENT OF PROFITS AND LOSSES Rs. ' 000s

Description 31.12.07 31.03.07 31.03.06 31.03.05 Income Sales

Of Products Traded by the Company 28,104 - - - Of Products Manufactured by the

Company 1,540,137 - - - Less: Excise duty recovered 154,386 - - - Net Sales 1,413,855 - - -

Other Operating Income 12,231 - - - Other Income 10,381 52 18,886 16,344 Increase / (Decrease) in Inventory 30,885 - - - Total Income 1,467,352 52 18,886 16,344 Expenditure

Raw Materials & Components Consumed 496,801 - - - Staff Costs 323,219 - - - Other Manufacturing Expenses 283,131 - - - Administration Expenses 127,136 - 93 109 Selling & Distribution Expenses 106,994 - - - Interest 29,609 19 25 48 Depreciation 77,783 - 269 292 Others - 14 18,120 15,297

Total Expenditure 1,444,673 33 18,507 15,746 Net Profit before Tax & Exceptional items 22,679 19 379 598 Provisions for Taxations 9,527 4 294 257 Net after Tax & before Exceptional items 13,152 15 85 341 Extra Ordinary Item of Expenditure - - - - Exceptional Items - - - - Net Profits after tax & Exceptional items 13,152 15 85 341 Prior year adjustments - - - - Surplus Brought Forward 59 44 2,003 1,662 Surplus Brought Forward (taken over as per Scheme) 48,211 Profit available for appropriation 61,422 59 2,088 2,003 Appropriations:

General Reserve - 9 - Contigency Reserve - - - Divident on Equity Shares - 1,785 - Tax on above Dividend - 250 - Proposed Dividend - - - Tax on Proposed Dividend - - -

Balance carried to Balance Sheet 61,422 59 44 2,003

36


Statement of Cash Flow

Rs. ' 000s Description 31.12.07 31.03.07 31.03.06 31.03.05 A. Cash Flow from Operating Activities: Net Profit Before Tax and Extraordinary Items 22,679 19 380 598 Adjustment for Depreciation 77,783 - 269 292 Foreign exchange loss / (gain) - Net (13,746) - - - Interest Expenses 29,609 19 25 48 (Gain) / Loss on Sale of Fixed assets - Net (38) - (4) (10) (Gain) / Loss on Sale of Investments (1,170) - - - Provision for debts and bad debts written off 839 - - - Deferred Revenue Expenditure - Net 2,790 - - - Operating Profit before working capital changes 118,746 38 670 928 Changes in working capital (Increase) / Decrease 69,880 (1,199) (540) 759 Cash generated from Operations 188,626 (1,161) 130 1,687 Income tax paid - net of refund (22,579) 1,678 (669) (257) Net Cash from Operating Activities ( A ) 166,047 517 (539) 1,430 B Cash Flow from Investment Activities: (Additions) / Deductions to Fixed Assets / Other Adjustments (448,021) 271 (95) (18) Purchase of Investments (37,440) Payment of voluntary retirement expenditure (2,362) Proceeds from sale of Investments 38,610 Net Cash used in Investing Activities ( B ) (449,213) 271 (95) (18) C Cash Flow from Financing Activities: Increase / (Decrease) in Share Capital / Borrowings 410,835 (87) (191) (168) Interest Paid (30,829) (19) (25) (48) Dividend Paid (13,778) (2,035) Net Cash used in Financing Activities ( C ) 366,228 (2,141) (216) (216) Net change in cash and cash equivalents (A+B+C) 83,062 (1,353) (850) 1,196 Cash and cash equivalents (Opening Balance) 23,922 1,945 2,795 1,599 Cash and cash equivalents (Closing Balance) 106,984 592 1,945 2,795

37


TECHCONS LIMITED Schedule forming part of the Balance Sheet as at 31st December, 2007 SCHEDULE A CAPITAL 31.12.2007 31.03.2007 Rs. ‘000 Rs. ‘000 Authorised Equity Share Capital 90,000 (90,000) Equity Shares of RS.10 each 900 900 Preference Share Capital -10,000 (10,000) 9.3% Cumulative Redeemable Preference Shares of Rs.10 each (Note 14.1)

100 100

1,000 1,000 Issued, Subscribed, and Paid-up Equity Share Capital - (51,000) Equity Shares of Rs. 10/- each fully paid-Up 510 - 510 SCHEDULE B RESERVES AND SURPLUS Description Balance as at

31 March 2007

Amount taken over consequent to Merger

Additions during the year

Deductions / adjustments during the year

Balance as at 31 December 2007

Capital Reserve (Arising out of amalgamation during 1989-90- Reserves of amalgamating companies)

(a) Capital Subsidy - 387 387

(b) Investment Allowance (Utilised) Reserve

2,536 2,536

Other Reserve Capital Subsidy - 2,281 2,281 Share Premium - Capital Reserve - 2,772 - 2,772 Export Incentive Reserve - 1.908 1,908

General Reserve 9 691,846 - 6,220 685,635 Surplus in Profit and Loss Account 59 48,211 13,152 61,422

TOTAL 68 749,941 13,152 6,220 756,941 For the Year 2006-07 53 15 - 68

38

INFORMATION MEMORANDUM SCHEDULE C SECURED LOANS 31.12.2007

Rs. ‘000 31.03.2007

Rs. ‘000 Term Loan from a Bank 486,832 - Bank Cash Credit 231,313 - 718,145 SCHEDULE D UNSECURED LOANS

31.12.2007Rs. ‘000

31.03.2007 Rs. ‘000

Fixed Deposits 42,458 - Interest free sales tax loan from Government of Andhra Pradesh 62,738 - 105,196

SCHEDULE EFIXED ASSETS

Rs.'000 DEPRECIATION

As at Taken over on Deductions / As at As at Taken over on For the Deductions / As at As at 31 Mar 2007 Merger Adjustments 31 Dec 2007 31 Mar 2007 Merger Period Adjustments 31 Dec 2007 31 Dec 2007

Land - Freehold - 13,608 - - 13,608 - - - - 13,608

Land - Leasehold - - - - - - - - - -

Buildings (Note 15.1) - 108,363 110 108,473 - 50,058 2,169 52,227 56,246

Plant and Machinery ( - 1,301,833 100,991 170 1,402,654 - 688,714 70,550 99 759,165 643,489

Furniture and Fittings - 34,047 1,236 734 34,549 - 26,662 2,136 423 28,375 6,174

Office Equipment - 12,638 14 291 12,361 - 11,048 450 276 11,222 1,139

Vehicles - 4,085 68 842 3,311 - 1,920 505 661 1,764 1,547

A Total - 1,474,574 102,419 2,037 1,574,956 - 778,402 75,810 1,459 852,753 722,203

Licence - 7,894 - 7,894 - 658 1,973 2,631 5,263

B Total - 7,894 - - 7,894 - 658 1,973 - 2,631 5,263

Grand Total ( A + B ) 1,482,468 102,419 2,037 1,582,850 - 779,060 77,783 1,459 855,384 727,466

NET BLOCKDESCRIPTION Additions/A

djustments

GROSS BLOCK

SCHEDULE F INVESTMENTS

As at December 31, 2007 (Rs. ‘000)

As at March 31, 2007 (Rs. ‘000)

Investments In Share

Non Trade - Long Term – Quoted

Equity Shares of RS.l 0 each fully paid- up in Rane Holdings Ltd. 1,950,000

Add: Acquired during the year 1,950,000 Less: Sold during the year - Balance Non-Trade - Long Term – Unquoted Equity Shares of Rs.l 0 each fully paid- up in Techcons Limited

37,440 37,400

-

39


25,000 Add: Acquired during the year 26,000 Less: Cancelled on Merger of Manufacturing undertaking of Rane Engine Valves 51,000 Balance - Investment. – Current HDFC Cash Management Fund – Savings Plan - Daily Dividend Reinvestment Aggregate value of Investment Quoted Unquoted

250 260

(510)

- - SCHEDULE G INVENTORIES


As at March 31, 2007 (Rs. ‘000)

Raw Materials Work-in-progress Finished Goods Stores and Spares

121,073 54,920 55,701 61,891

- - - - -

293,585 -

SCHEDULE H SUNDRY DEBTORS

A2(R

7

)

s at December 31,007

As at March 31,200

s. ‘000) (Rs. ‘000

Unsecured Considered Good Over Six months old Others

1,323 9

2 322,53

- -

323,86 -

Considered doubtful Over six months old Less : Provision for Doubtful Debts

9 2

9

6,48

330,35

6,48 2 323,86 -

SCHEDULE I CASH AND BANK BALANCES


As at March 31, 2007 (Rs. ‘000)

Cash on hand Balances with Scheduled Banks I In Current Accounts In Deposit Accounts

1,038

6,073 99,873

-

592 -

106,984 592

40

INFORMATION MEMORANDUM SCHEDULE J LOANS AND ADVANCES


As at March 31, 2007 (Rs. ‘000)

Advances recoverable in cash or in kind or for value to be received Loan to a body corporate Advance payment of Income Tax (Net of Provisions) Deposits Balance with Customs, Excise and other authorities

218,598

33,250

35,541

16,690

41,828

-

345,907 -

SCHEDULE K CURRENT LIABILITIES

A2(R

, 7

) 2

3 2 6 0

0

- - - -

3 0

s at December 31,007

As at March 31200

s. ‘000) (Rs. ‘000Sundry Creditors for Goods & Services Investor Education and Protection Fund Unclaimed Dividends Unclaimed matured Fixed Deposits Fixed deposit interest paid but not encashed Interest accrued but not due on Loans / Deposits

323,56

1,5166

11,04

1

326,79 1

SCHEDULE L PROVISIONS


As at March 31, 2007 (Rs. ‘000)

290,259 324,443

11,064 12,421

Provision for Tax Less : Advance payments and Tax Deducted at Source Net provision for tax Provision for Fringe Benefits Tax Less : Advance payments Net provision for Fringe Benefit Tax Total Provision for Tax Dividend on Equity Shares Provision for tax on distributed profits

(34,184)*

(1,357)*

- - -

4 -

- -

- - -

4

4

41


SCHEDULE M MISCELLANOEUS EXPENDITURE (to the extent not written off or adjusted)

Nine Months ended December 31, 2007

(Rs.’000)

Year ended March 31, 2007

(Rs. ‘000)

4,174

2,362

- -

2,790

- -

Voluntary Retirement Expenditure (Taken over on Merger) Add : Additions during the year Less : Written off during the year

6,536

2,790

-

-

3,746 - SCHEDULE N SALES AND OPERATING REVENUE


(Rs.’000)


(Rs. ‘000)

1,568,241 154,386

- -

10,475 1,756

- -

Sales Less : Excise Duty Net Sales Sale of Scrap Interest – trade

1,413,855

12,231

-

-

1,426,086 -

SCHEDULE O OTHER INCOME


(Rs.’000)


(Rs. ‘000)

Income from Trade Investments Interest - others Profit on sale of investments Profit on Sale of Assets / Undertaking Exchange gain Miscellaneous Income

2,087 1,170

203 6,795

126

- - -

52 -

10,381 52

42


SCHEDULE P MANUFACTURING AND OTHER EXPENSES


(Rs.’000)


(Rs. ‘000)

44,009 35,727

55,701 54,920

79,736

481,171 15,630

124,244 75,483

7,359

50,786 4,531 6,684

255,278 25,957 41,984 43,262

3,217 6,221 3,176

17,283 26,429 35,070

78,374

2,244 25,537

839 538 623 165

3,529 1,667

(110,621)

-

- - - - -

- - - - - - - - - - - - -

- - - - 3

11 - -

Opening Stock : Finished Goods Work-in-progress Raw Materials and Components Trade Purchase Stores and Tools Consumed Power and Fuel Royalty and Trademark Fees Repairs and Maintenance Plant and Machinery Buildings Others Salaries, wages and bonus Contribution to provident and other funds Staff Welfare Expenses Job Work expenses Rent Insurance Rates and Taxes Traveling and Conveyance Professional charges Administrative Expenses Selling and distribution expenses Packing and Forwarding Advertisement and Sales Promotion Commission and Discount Provision for Doubtful Debts Directors’ Sitting Fees Audit Fees Loss on Sale of Assets Bank Charges Excise Duty adjustment on Inc / (Dec) of finished goods Less Closing Stock Finished Goods Work-in-progress

1,306,396 14

43


SCHEDULE Q INTEREST AND FINANCE CHARGES


(Rs.’000)

Fifteen Months ended March 31, 2007

(Rs. ‘000)

Interest : Term Loans Fixed Deposits (Note below) Cash Credit Other Interest

15,392

2,458 11,759

-

- - -

19 29,609 19

NOTES TO ACCOUNTS SIGNIFICANT ACCOUNTING POLICIES FOLLOWED BY THE COMPANY ACCOUNTING POLICIES AND NOTES ACCOUNTING POLICIES 1. System of Accounting 1.1 The financial statements are prepared under the historical cost convention, on the accrual basis of

accounting in accordance with the Companies Act, 1956 and comply with the Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) to the extent applicable.

1.2 The preparation of financial statements in conformity with generally accepted accounting principles

requires management to make estimates and assumptions that affect the reported amounts. Estimates include allowance for uncollectible accounts receivables, future obligations under employees benefit plans, useful life of fixed assets, accounting for employee cost pending execution of agreements with workmen unions etc. The actual amounts (crystallized after preparation of financial statements) may differ from these estimates.

2. Fixed Assets, Impairment & Depreciation 2.1 Fixed assets are stated at cost. None of the fixed assets has been revalued. 2.2 If an asset is carried at a value more than the recoverable amount through use or sale of the asset, such

impairment of asset is recognized as expenditure of the year. If such impairment ceases to exist then the same is recognized as income of that year.

2.3 2.3.1 Depreciation is provided on straight line method at the rates specified in Schedule-XIV to the

Companies Act, 1956 except for :

a) Assets acquired upto 31.03.1995 –On written down value method. b) Assets of following categories based on useful life acquired on or after 01.04.1996

Assets Useful Life (Years) 1. Vehicles 5 2. Furniture & Fittings 5 3. Office Equipments 3 4. Licence 3

44

INFORMATION MEMORANDUM 2.3.2 In case of second hand assets, depreciation is calculated taking into account the estimated useful life of

the assets. 3. Investments 3.1 Investments are categorized into long term and current investments. Current Investments are stated at

lower of cost and fair value. Long term investments are stated at cost. Any decline in the value of long term investment is recognized by providing for such diminution in the value of investments, unless the reduction is temporary in nature. Any gains or losses as the case may be, arising on disposals of such investments, are reckoned as income or expenditure of the year.

4 Inventories 4.1 Raw materials, work in progress and finished goods are valued at lower of cost and net realisable

value. Other items of inventory are valued at cost. Cost is determined on Weighted Average basis. Cost includes conversion and other costs incurred in bringing the inventories to the present location and condition.

5 Foreign Currency Transactions 5.1 Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the

transaction. Foreign currency monetary assets and liabilities are translated at year end exchange rates. Exchange differences arising on settlement of transactions and translation of monetary items are recognised as income or expense in the year in which they arise, except upto 31st March,2007, in respect of liabilities for acquisition of fixed assets from a country outside India in which case the exchange difference is adjusted in the carrying value of the fixed assets.

5.2 Premium or discount on forward contracts is amortised over the life of such contract and is recognised

as income or expense, except in respect of the liabilities for the acquisitions of fixed assets where such amortization is adjusted in the carrying value of the fixed assets.

6. Borrowing Costs 6.1 Borrowing costs that are attributable to the acquisition or construction of qualifying assets requires a

substantial period of time are capitalised as a part of the cost of the asset if they will result in future economic benefit to the company. All other borrowing costs are charged to revenue.

7. Taxes on Income 7.1 Provision for current tax and Fringe Benefit Tax is made based on the tax liability computed on taxable

income in accordance with relevant tax rates and tax laws. 7.2 Deferred tax, being tax on timing difference between taxable income and accounting income that

originate in one year and are capable of reversal in one or more subsequent years, has been recognized. 7.3 Deferred tax assets, excluding assets arising from loss/depreciation carried forward, are not recognized

unless there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In case of carried forward loss/depreciation, it is recognized only if virtual certainty exists.

8. Research & Development 8.1 Revenue expenditure is charged under natural heads in Profit and Loss Account. 8.2 Capital expenditure is shown as addition to fixed assets under natural heads.

45


9. Retirement Benefits 9.1 The company operates gratuity and pension schemes for the benefit of eligible employees. The scheme

funds are administered by trustees and are independent of company’s finances. The company’s contributions are charged to the Profit and Loss Account in the year of accrual. Liability on account of leave salary has been provided for in the Profit and Loss Account computed on the basis of actuarial valuation for all eligible employees.

10. Voluntary Retirement Benefits 10.1 Voluntary retirement payments are written off over a period during which the benefits from such

expenditure are expected to be derived. 11. Pre-operative Expenditure 11.1 All expenditure incurred prior to commencement of business / Expansion of business activities is

carried forward as pre-operative expenditure, which is capitalised along with the cost of fixed assets on commencement of Business.

12. Revenue Recognition 12.1 Sales are net of sales returns and trade discounts and exclude all taxes and levies. NOTES 13. Scheme of Demerger, Merger and Amalgamation 13.1 A Scheme of arrangement (the scheme) between erstwhile Rane Engine Valves Limited (demerged

company) and the company under Section 391 and Section 394 of the Companies Act, 1956 was sanctioned by the High Court of Judicature at Madras on December20, 2007. In terms of the scheme, the manufacturing undertaking of the demerged company stands transferred to and in favour of the company with effect from April1, 2007 (the appointed date).

13.2 Upon the scheme coming into effect and consequent to fresh Certificate of Incorporation received from

the Registrar of Companies Tamilnadu, Chennai name of the company has been changed as under:

Certificate Dated Change of name particulars 6th February 2008 From “Techcons Limited” to “Rane Engine

Valve Limited” 13.3 Consequent upon the scheme coming into effect on February 06, 2008, the assets and the

liabilities inclusive of the associated rights, licenses, permits, registrations, quotas etc. of the manufacturing undertaking of the demerged company now stand transferred to the company on a ‘going concern’ basis effective from 1st April,2007.

46

INFORMATION MEMORANDUM The manufacturing business comprises the following:

a) The manufacturing units as detailed below:

i. Manufacturing Unit located at No. 'Glendale' 5,Noble Street, , Alandur, Chennai 600016, Tamilnadu

ii. Manufacturing Unit located at Plot Nos. 68 to 77, Industrial Estate, Medchal 501 401, R.R District Andhra Pradesh

iii. Agricultural land admeasuring approximately 9.90 acres at Survey Nos. 806 and 807 of Medchal Village and Mandal 501 401, R.R. District, Andhra Pradesh

iv. Manufacturing Unit located at Redhills Road, Madhavaram Ponneri 601 204, Tamilnadu v. Manufacturing Unit located at Survey No.177/20, Hyderabad- Vikarabad Road, Aziz

Nagar,500 075,R.R.District, Andhra Pradesh. vi. Manufacturing Unit under construction at Survey Nos.109,111 & 121 Seniapatti,

Kasavanur Village, Viralimalai Union, 621316, Pudukottai Dist., Tamilnadu b) All Assets wherever situated relatable to manufacturing undertaking. c) All present and future liabilities (including contingent liabilities and liabilities allocable under the

scheme) pertaining or relatable to manufacturing undertaking. d) All rights, licenses, assignments and other interest in connection with or relating to manufacturing

undertaking. e) All deposits balances with Government / Authorities in connection with or relating to

manufacturing undertaking, f) All patents and copy rights, industrial designs, trade secrets, product registrations and other

intellectual property and all other interests exclusively relating to the goods and services being dealt with by the Manufacturing undertaking.

g) Pending completion of the relevant formalities of transfer of certain assets and liabilities acquired

pursuant to the scheme, such assets and liabilities remain in the name of the erstwhile Demerged Company – Rane Engine Valves Limited.

13.4 The Scheme also provides for the transfer of the assets and liabilities of the manufacturing

undertaking, the legal proceeding in relation to the manufacturing undertaking, the employees of the manufacturing undertaking and employee related benefits and all contracts and agreements in relation to the manufacturing undertaking, to the company. Accordingly, the following assets and liabilities have been transferred to the Company with effect from April 01, 2007 (Appointed Date):

Rs.000 Gross Block

Land - freehold 13,608 Buildings 108,362 Plant and Machinery 1,301,833 Furniture and fittings 34,047 Office Equipment 12,638 Vehicles 4,085 Licence 7,895 1,482,468

Less Accumulated Depreciation 779,060 Less Impairment of Assets 1,600 780,660

701,808 Capital Work-in-progress 43,856

47


Net Block 745,664 Investments 250 Current Assets, Loans and Advances

Inventories 227,328 Sundry Debtors 318,815 Cash and Bank Balances 23,330 Loans and Advances 227,889 797,362

Less: Current Liabilities and Provisions Liabilities 266,629 Provisions - 266,629 Net Current Assets 530,733

Miscellaneous Expenditure to the extent not written off or adjusted 4,174

TOTAL ASSETS 1,280,821 Secured Loans

Term Loans 156,603 Cash Credit 160,207 316,810

Unsecured Loans

Fixed Deposits 47,030 Interest free sales tax loan from Government of Andhra Pradesh 61,685 108,715

Deferred Tax Liability 53,845

TOTAL LIABILITIES 479,370

SURPLUS OF BOOK VALUE OF ASSETS OVER LIABILITIES REPRESENTED BY SHARE CAPIAL AND RESERVES 801,451

13.5 The figures for the nine month ended 31st December, 2007 are inclusive of the figures relating to the

Manufacturing Undertaking of the demerged company and thus are not comparable with those of the previous years.

14. Share Capital 14.1 The Authorised Capital was increased on 17.01.2008 from Rs.1,000,000 divided into 90,000 equity

shares of Rs.10/- each and 10,000 9.3% cumulative preference shares of Rs.10/- each to Rs.100,000,000/- divided into 10,000,000 Equity Shares of Rs.10/- each in terms of Clause 20.6 of the Scheme sanctioned by the High Court of Judicature of madras.

14.2 As a result of the demerger the entire share capital of the company which is entirely held by erstwhile

Rane engine Valves Limited is cancelled without any further act or deed as provided in the scheme. 14.3 5,150,092 equity shares of Rs.10/- each aggregating to Rs.51.51 million are to be issued to the

shareholders of the demerged company, in consideration of the demerger of the manufacturing undertaking and transfer and vesting thereof with the company in the ratio of 1 equity share in the company for every I equity share held in the demerged company.

48

INFORMATION MEMORANDUM 14.4 Pending issue of shares these have been shown as Share Capital Suspense. 15. Loans 15.1 Foreign Currency Term Loan and Rupee Term Loan from a Bank are secured by a first charge of the

Company’s immovable properties both present and future of the assets of the Manufacturing Undertaking of the demerged company acquired on merger.

15.2 Cash credit from banks is secured by hypothecation of raw materials, work in progress, finished goods,

stores & spares and book debts. 16. Fixed Assets 16.1 Plant and machinery includes decommissioned items carried at an estimated net realizable value of Rs

428,245 taken over under the scheme of demerger. 16.2 Impairment loss of Rs.16,00,000 identified in respect of certain items of machinery has been provided

has also been taken over under the scheme of demerger. 17. Related Party Disclosures: 17.1 Related parties and their relationship Significant Influence: Rane Holdings Limited Key Management personnel: Mr L Ganesh Relatives of key management personnel :

1. Mr L Lakshman, 2. Mrs Meenakhi Ganesh, 3. Ms. Aparna Ganesh 4. Mr.Aditya Ganesh 5. Mrs T G Saraswathy 6. Mrs Hema C Kumar 7. Mrs Vanaja Aghoram 8. Mrs Shanthi Narayan

17.2 Disclosure in respect of material transactions with associated parties. For the period 01.04.2007 to 31.12.2007 (Rs.in 000's)

S.No Particulars Significant Influence

Key Management

Personnel

Relatives of Key

Management Personnel

1 Sale of Goods 2 Services received 3 Interest Received 1,849 4 Remuneration paid 4,319 5 Purchase of Goods 6 Trade Mark Fees Paid 7,297 7 Professional Service Charges Paid 28,022 8 Rent received 9 Sitting Fees 150

49


10 Interest paid on Fixed Deposits 67 505 11 Dividend Received 12 Amount receivable - Trade 13 Amount payable - Trade 2,185 14 Purchase of investments 15 Sale of investments 16 Fixed deposits accepted / (repay) 980 750 17 Fixed deposits outstanding 550 8,850 18 Corporate Loan give Outstanding 33,250

18 Segment Reporting: 18.1 The entire operations of the company relate only to one segment, viz, “Components for Transport

Industry”. As the exports are predominantly to developed countries, geographical risk is not different from domestic market and hence no separate secondary segment disclosure is required.

19 There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund as on 31st March, 2007.

20 Contingent Liabilities not provided for

31.12.2007 31.03.2007 Rs. ‘000 Rs. ‘000 Labour Disputes 5,614 NIL Other Liabilities 11,735 NIL

21 Figures for the previous period have been regrouped wherever necessary to conform to the current

period’s classification. 22 Figures in brackets in the Schedules and Notes pertain to previous year. As per our report of even date attached For and on behalf of the Board For BRAHMAYYA & CO., L.GANESH Chartered Accountants Chairman & Managing Director P.S.KUMAR K.SANKARANARAYANAN L.LAKSHMAN Partner General Manager – Finance & Secretary Director Membership No.15590 Chennai Dated : March 17, 2008

50

INFORMATION MEMORANDUM CHANGES IN ACCOUNTING POLICIES

THERE HAS BEEN NO CHANGE IN THE ACCOUNTING POLICIES FOLLOWED BY THE COMPANY.

EXCEPTIONAL ITEMS: STATEMENT OF EXCEPTIONAL ITEMS : Rs. ' 000s

Description 31.12.07 31.03.07 31.03.06 31.03.05 Exceptional Item of expenditure: Debtors written off - - - - VRS Charged off 2,790 - - - Total 2,790 - - - Income: Profit on sale of Investments 1,170 Profit on sale of Undertaking 52 Total 1,170 52 - - DETAILS OF OTHER INCOME: Rs. ' 000s

Description 31.12.07 31.03.07 31.03.06 31.03.05

Profit Before Tax ( excluding exceptional items) 22,679 19 380 598 20% of Net Profits before Tax 4,536 4 76 120 Other Income for the year 22,612 52 24 123 Other Income Details: Recurring from Business Activities 10,475 Not Recurring from Business Activities: Surplus from Sale of Assets 203 4 10 Exchange Fluctuation 6,795 Profit on sale of Undertaking 52 Others 126 85 Sub Total 7,124 52 4 96 Income from Investment Activities: Interest 3,843 20 27 Dividend Profit on Sale of Investments 1,170 Sub Total 5,013 - 20 27 Total Other Income 22,612 52 24 123

51


TAX STATEMENT: Rs. ' 000s

Description 31.12.07 31.03.07 31.03.06 31.03.05

Profit as per Books 22,679 19 379 598 Tax Rate (%) 11.33%* 33.66% 8.415%* 35.88% Notional Tax Liability 2,569 6 32 215 Adjustments Deductions u/s 80 HHC Profit on Sale of investments Income exempt u/s 10 (34) - Dividends Difference between Tax & Book Depreciation - 110 On account of MAT Tax Difference - Other adjustments (6) 218 Total Adjustments - (6) 328 #VALUE! (2) #VALUE! 118 Tax Expenses / ( Savings ) thereon - (2) - 118 Tax Provision 2,569 4 32 333 * Minimum Alternate Tax RATES OF DIVIDEND:

Description 31.03.07 31.03.06 31.03.05

Equity Shares of REVL Rates of Dividend ( %) - 350 - Dividend Amount - 1,785,000 - AGEWISE ANALYSISI OF SUNDRY DEBTORS AND DETAILS OF LOANS AND ADVANCES AS AT 31.12.2007:

Particulars 31.12.07 Sundry Debtors ( Unsecured) Considered Good Over Six Months Old 1,323 Others 322,539 323,862 Considered Doubtful Over Six Months Old 6,489 330,352

52


Particulars 31.12.07 Less: Provisions for Doubtful Debts 6,489 Total 323,862 Loans and Advances ( Unsecured, Considered Good) Advances recoverable in Cash or in Kind or for value to be received 218,598 Loan to Body Corporate 33,250 Advance Payment of Income-tax ( net of Provisions ) 27,600 Balance with Customs, Central Excise Departments and Other authorities 41,828 Deposits 16,690 Total 337,965 CAPITALISATION STATEMENT:

Particulars Pre Issue 31.12.2007 As adjusted for issue Borrowings: Short term debt 231,313 Long term debt 592,028 Shareholders' Fund Equity Share Capital 51,510 Reserve and Surplus 756,938 Total Shareholders' Fund 808,448

Long Term Debt / Equity Ratio 0.73 : 1 DETAILS OF RESERVE AND SURPLUS: Rs. ' 000s

Description 31.12.07 31.03.07 31.03.06 31.03.05 Capital Reserve:

Capital Subsidy 387 Investment Allowance (Utilised) Reserve 2,536

Other Reserve: Capital Subsidy 2,281 Share Premium Capital Reserve 2,772 Investment Allowance (Utilised) Reserve - Export Incentive Reserve 1,908 General Reserve 685,635 Surplus in Profit and Loss A/c 61,422 67 53 2,003

Total 756,941 67 53 2,003

53


DETAILS / ANALYSIS OF OUTSTANDING UNSECURED LOANS TAKEN BY THE COMPANY Rs. ' 000s

Sl.No.

Name of the Lender Facility

Sanctioned Amount

Balance in INR as on 31.12.07 Rate of Interest Repayment Schedule

1 Government of

Andhra Pradesh Interest Free Sales Tax Loan

122,075 62,738 NIL 27.02.2010 to 27.02.2023

2 FD Holders Fixed Deposits 42,458 Various rates

ranging from 7% to 9% depending n the scheme.

2007-08: 5,713

2008-09: 26,550 2009-10: 10,195 TOTAL : 42,458 PRINCIPAL TERMS OF LOANS AND ASSETS CHARGED AS SECURITY 1. Foreign Currency Term Loan and Rupee Term Loan from a Bank are secured by a first charge of

the Company’s immovable properties both present and future. 2. Cash credit from banks is secured by hypothecation of raw materials, work in progress, finished

goods, stores & spares and book debts. RELATED PARTY TRANSACTION Related Party Transaction: Related Party disclosure have been set out herein below. The related parties, as defined by Accounting Standard - 18 'Related Party Disclosure' issued by the Institute of Chartered Accountancts of India, in respect of which the disclosure have been made, have been identified on the basis of disclosure made by the Key managerial persons and taken on record by the Board. For the period 01.04.2007 to 31.12.2007 (Rs.in 000's)


Key Management

Personnel

Relatives of Key


1 Sale of Goods 2 Services received 3 Interest Received 1,849 4 Remuneration paid 4,319 5 Purchase of Goods 6 Trade Mark Fees Paid 7,297 7 Professional Service Charges Paid 28,022

54



Key Management

Personnel

Relatives of Key


8 Rent received 9 Sitting Fees 150

10 Interest paid on Fixed Deposits 67 505 11 Dividend Received 12 Amount receivable - Trade 13 Amount payable - Trade 2,185 14 Purchase of investments 15 Sale of investments 16 Fixed deposits accepted / (repay) 980 750 17 Fixed deposits outstanding 550 8,850 18 Corporate Loan give Outstanding 33,250

ACCOUNTING RATIOS: (Rs.in 000's)

Ratios 31.12.07 31.03.07 31.03.06 31.03.05

Earnings per share (EPS) Profit After Tax (PAT) A 13,152 15 85 341 Number of equity shares ( ' 000) B 5,151 51 51 51 Earnings per share A/B * 2.55 0.29 1.67 6.68 Return on Net worth Net profit after tax A 13,152 15 85 341 Net Worth B 804,705 577 563 2,513 Return on Net worth A/B 2% 3% 15% 14% Net Assets value per equity share: Equity Net Worth A 804,705 577 563 2,513 Number of equity shares ( ' 000) B 5,151 51 51 51 Net Assets value per equity share A/B 156.22 11.32 11.03 49.27 * Not annualised PART B SUBSIDIARY - The company does not have any subsidiary.

55


FINANCIAL STATEMENTS OF GROUP COMPANIES

Rane (Madras) Ltd.

a) Date of Incorporation: 31-03-2004

b) Nature of activities: Manufacturing and marketing of auto components viz., steering gears

assembly, steering linkage products and suspension joints.

c) Financial Information (Rs. ‘000)

2006-07 2005-06 2004-05 Income 3,329,805 2,805,136 2,001,700 Profit after Tax 136,166 86,402 42,307 Equity Capital 101,641 101,641 101,641 Reserves (excluding Revaluation Reserves)

338,134 251,511 204,793

Earnings Per Share (Rs.) 13.08 8.02 5.4 Net Asset Value(Rs.) 38.50 30.46 30.15

Note: As per the Scheme of arrangement approved by the High Court of Judicature at Madras, the manufacturing undertaking of Rane Holdings Limited was demerged and transferred into the Company, with effect from July 01, 2004, vide High Court Order sanctioned on April 25, 2005. The name of the company was changed to Rane (Madras) Limited on February 22, 2005.

d) The shares of the company are listed and traded on MSE, NSE and BSE with effect from

August 30, 2005. The details of the highest and lowest price during the last six months is as follows:

Month High (Rs.) Low

(Rs.) September 07 105.00 85.10 October 07 109.40 75.15 November 07 93.10 73.10 December 07 98.90 81.00 January 08 109.80 63.75 February 08 81.80 63.40

e) Information on public or rights issue of shares during the last three years No change in the share capital of the company was made by way of public or rights issue. Based on the approval of the shareholders and the scheme sanctioned by the High Court of Madras on April 25, 2005 the erstwhile Rane (Madras) Limited demerged and transferred the manufacturing undertaking into the company w.e.f July 01, 2004. In consideration of the demerger of the manufacturing undertaking the company issued and allotted 8,131,316 fully paid up equity shares of Rs.10 each, aggregating Rs.81 Million to the shareholders of the demerged company.

56


Rane Brake Lining Limited

a) Date of Incorporation: 17.12.2004 b) Nature of activities: Manufacture of brake linings, disc pads, railway blocks and clutch

facings c) Financial Information (Rs. ‘000)

31.03.2007 31.12.2005 Income - - Profit after Tax (82) (82) Equity Capital 100 100 Reserves (excluding Revaluation Reserves)

- -

Earnings Per Share (Rs.) (0.82) (0.82) Net Asset Value (Rs.) 0.73 0.77

d) Consequent to the sanctioning of the Scheme by the Hon’ble High Court of Madras, the

manufacturing undertaking of erstwhile Rane Brake Linings Limited has been transferred to and vested in Rane Brake Lining Limited. In terms of the Scheme, Rane Brake Lining Limited has allotted shares to the shareholders of erstwhile Rane Brake Linings Limited and has applied for listing of the said shares with National Stock Exchange of India Limited, Bombay Stock Exchange Limited and Madras Stock Exchange Limited.

Rane Diecast Limited

2006-07 2005-06 2004-05

e) The company was incorporated as a private limited company under the name EMS Logistics Line Private Limited during December 2004 with a paid-up share capital of Rs. 1 lakh. In order to give effect to the Scheme, the company was converted from a private limited company to a public limited company. To facilitate the conversion, the company made a rights issue to its then promoter viz. Rane Holdings Limited for raising the capital from Rs. 1 Lakh to Rs. 5 Lakhs. Thus, the company was converted as a public limited company on September 26, 2007 and its name changed to Rane Brake Lining Limited w.e.f. February 6, 2008. No other change was made to the capital by public or rights issue except allotment of shares under the Scheme.

a) Date of Incorporation: 23.08.1996 b) Nature of activities: Manufacture of machined aluminium diecast products. c) Financial Information (Rs. ‘000)

Income 88,374 54,816 76,160 Profit after Tax (31,132) (2520) 81 Equity Capital 83,111 44,000 44,000 Reserves (excluding Revaluation Reserves)

42,871 2,000 2,000

Earnings Per Share (Rs.) (3.75) (0.57) 0.02 Net Asset Value (Rs.) 12.02 5.36 4.63

d) The shares of the company are not listed on any stock exchange. e) Details of Public or Rights Issue during the last three years: During the year 2006-07 3,911,111 equity shares of Rs.10/- each at a premium of Rs.10.45 per share was allotted on rights basis to the holding company erstwhile Rane Brake Linings Limited. Further, 1,466,989 equity shares was allotted by way of a preferential issue to M/s. Rane Holdings Limited

57


during the year 2007-08. The company has become a subsidiary of Rane Holdings Limited upon the Scheme coming into effect on February 6, 2008.

b) Nature of activities: Manufacturing of solid and energy absorbing steering columns, intermediate shafts and universal joint assemblies.

2005-06

Rane NSK Steering Systems Limited (RNSSL)

a) Date of Incorporation: 22.03.1995

c) Financial Information (Rs. ‘000)

2006-07 2004-05 Income 412,955 367,525 389,970 Profit after Tax 14,281 53,840 21,030 Equity Capital 160,000 160,000 160,000 Reserves (excluding Revaluation Reserves)

- - -

Earnings Per Share (Rs.) 0.89 3.37 1.31 Net Asset Value (Rs.) 6.38 5.49 10.08

d) RNSSL is a joint venture promoted by Rane Investments Limited with NSK Limited, Japan

and is an unlisted entity e) Consequent to the approval of the shareholders at their Extra ordinary meeting held on July

09, 2007 the Board of directors of the company at their meeting held on October 18,2007 allotted 1,900,000 shares on a rights basis in the ratio of 19 equity shares for every 160 equity shares held in the company.

a) Date of Incorporation: 03.07.1987

(Rs. ‘000)

Rane TRW Steering Systems Limited (RTSSL)

b) Nature of activities: Manufacturing of Hydraulic Power Steering Gears and Seat Belts. c) Financial Information

2006-07 2005-06 2004-05 Income 4,101,691 3,484,424 3,364,750 Profit after Tax 708,449 565,807 575,046 Equity Capital 87,382 87,382 87,382 Reserves (excluding Revaluation Reserves)

1,354,532 1,194,091 927,199

Earnings Per Share (Rs.) 81.07 64.75 65.81 Net Asset Value (Rs.) 146.65 116.11 81.76

d) RTSSL is an unlisted entity

e) During the last three years no changes have been made to the share capital of the company.

58


MANAGEMENT DISCUSSION & ANALYSIS OF OPERATIONS AND FINANCIAL CONDITIONS 1. FINANCIAL AND OPERATIONAL PERFORMANCE: The company has achieved a turnover of Rs.1,414 million and a profit before tax of Rs.23 million despite

reduced selling prices, increased input costs including raw materials, employees cost etc.

2. INDUSTRY STRUCTURE AND DEVELOPMENTS.

The year under review has seen continued buoyancy in all segments of automobile industry. Sustained spending on infrastructure, increasing availability of consumer credit together with the expectation of strong growth resuming in he agricultural sector are beneficial factors that would support growth in the current year. There are, however signs of difficulty in reigning in inflation spurred by rising commodity prices, increased interest rates and government policy on export. If these persist and interest rates go up, decline in growth rates may be unavoidable. A brief corrective phase is very likely before growth resumes.

The table below highlights the segmental growth (volume) of the Indian automotive industry

GROWTH % age

2005-06 2006-07 9 19 Passenger Cars 7 Utility Vehicles 13

23 Light Commercial Vehicles 7 SCV (One T & below) 146

4 Medium and Heavy Commercial Vehicles 34 15 Farm Tractors 15 17 Three Wheelers 28 18 Two Wheelers 11

Source: Society of Indian Automobile Manufacturers and Tractor Manufacturers Association

- Volatility in commodity prices - steel and other inputs

- Strengthening Rupee

3. OUTLOOK Sustained spending on infrastructure, and the continuing general economic growth, are beneficial factors

that should aid business growth in the medium and long term. Concerns of inflation caused through supply side constraints and increases in prices of commodities

continued. These have resulted in monetary measures, which have driven up the interest rates. It should be expected these would have a dampening effect on the growth sentiments.

Exports continues to be a focus area and your company will enhance capacities to meet growing demand from overseas customers. In this direction, a new plant has been set up near Trichy in Tamil Nadu to enable us to meet increased demand from domestic and export customers. Commercial production is expected to commence before the end of first half of 2008-09.

4. OPPORTUNITIES, THREATS AND RISK

The continued attractiveness of the Indian Auto Component industry as an outsourcing hub, presents opportunities for growth. Also, in the medium term the growth potential for the domestic industry will continue to be in double digits.

The main threats arise out of:-

- Low priced products import from China

59


- Apprehended temporary slow down of the Economy - Entry of MNCs in the Country

5. INTERNAL CONTROL SYSTEMS AND RISK MANAGEMENT

Your Company engaged the services of an independent agency to carry out internal audit of all the Company locations across the country. The Audit Committee of the Board approves the audit plan in the beginning of the financial year in consultation with the internal auditors, the statutory auditors and the operating management. The findings of the internal auditors are placed before the Audit Committee for review. The response of the operating management and counter measures proposed are discussed at the Audit Committee meetings. The process not only seeks to ensure the reliability of control systems and compliance with laws and regulations but also covers resources utilisation and system efficacy.

Risk Management is an integral part of the business process. With the help of experts, the company mapped the risks at the business processes and enterprise levels and evolved a risk management framework. Mitigative measures have been identified in respect of the latter. These would be periodically reviewed by the Board of Directors.

6. HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS

Your company attaches considerable importance to Human Resource Development (HRD) and harmonious industrial relations.

Comparison of fiscal 2006 with fiscal 2005

The management is continuously working on the development of human capital, vital in an ever changing business environment towards achieving the goals and realizing the Vision of the company. “Rane Institute for Employee Development” is a group resource that imparts training towards continuous enhancement of technical and managerial skills. On an average, 4.70 mandays of training per employee was imparted during the year across employee segments and divisions.

Total Employee Involvement is a key element of Total Quality Management (TQM) that enables continuous improvement to all business processes. The company conducts regular Employee Opinion Surveys, the outcome of which is deliberated and acted upon.

As of 1st April 2007, the total number of employees stood at 1,435.

7. CAUTIONARY STATEMENT

The information and opinion expressed in this Report may contain certain forward-looking statements, which the management believes are true to the best of its knowledge at the time of its preparation. Actual results may differ materially from those either expressed or implied in this report. The management shall not be liable for any loss, which may arise as a result of any action taken on the basis of the information contained herein. Prior written permission of the Company should be obtained for furnishing this information to any person.

• The company was incorporated in 1972. The company was engaged in the field of technical

consultancy until 2006 when the business of the company was taken over by Rane Holdings Limited as a going concern. Consequent to the Scheme, the company would commence its manufacturing operations by carrying on the business transferred to and vested in it. Hence, there are no comparable figures indicating the growth of the company.

60


• The sectoral growth (volume) of the Indian automobile industry during the year was: (Source: ACMA and SIAM).

Sectors Growth in 2006-07

Utility Vehicles 13%

Farm Tractors 15%

The entire operations of the company would relate to one segment.viz., “Components for Transport Industry’.

Passenger Cars 19%

Light Commercial Vehicles 7% SCV (One T & Below) 146% Medium and Heavy Commercial Vehicles 34%

Three wheelers 28% Two Wheelers 11%

1. SEGMENT PERFORMANCE REVIEW AND ANALYSIS

2. FACTORS AFFECTING BUSINESS PERFORMANCE

Pricing pressures from domestic OEM’s, steep increase in steel prices impacting raw material costs, increase in other input costs like employee compensation and exchange fluctuations arising out of depreciation of dollar on exports are few factors affecting business performance.

61


SECTION VI LEGAL AND OTHER INFORMATION OUTSTANDING LITIGATIONS AND DEFAULTS THE COMPANY, PROMOTERS, DIRECTORS OR THE GROUP COMPANIES

Except as stated below there are no outstanding litigations, suits, criminal or civil prosecutions, proceedings or tax liabilities against our Company and our Directors, Promoter and Promoter Group Companies, and there are no defaults, nonpayment of statutory dues, over-dues to banks/financial institutions, defaults against banks/financial institutions, defaults in dues payable to holders of any debenture, bonds and fixed deposits and arrears of preference shares issued by our Company, defaults in creation of full security as per terms of issue/other liabilities, proceedings initiated for economic/civil/any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (I) of Part 1 of Schedule XIII of the Companies Act) other than unclaimed liabilities of our Company and no disciplinary action has been taken by SEBI or any stock exchanges against our Company, Promoter or Directors

Against the Company :

Brief Particulars Claim Amount (Rs. in ‘000)

Court / Forum / Case Number

Current Status

Labour Cases K Chandrakumar & Ors v/s Rane Engine Valves Limited

Writ petition seeking interim stay against the order of the labor court to reinstate employees with continuity of service and back wages.

High Court, Madras Matter is pending

4,928/-

W.P. No. 38577 of 2005

R. Dhandapani v/s The Management of Rane Engine Valves Limited Termination of service and reinstatement with back wages

Labour Court, Chennai

-

ID No. 614 of 2004

Matter is pending

Rane Engine Valve Limited v/s The Govt. of Tamil Nadu Writ petition for an interim stay regarding payment of interest and damages on ESI contributions

3,223/-

High Court, Madras WP 22415 to 22417of 2005 and 24428 of 2005

Matter is pending. As per High Court order the company has paid 50% of the amount set out in the notice.

Rane Engine Valve Limited v/s The Employee State Insurance Corporation Non-deduction of ESI contribution of sub-contractors

599/-

Labour Court, Chennai CP No. 21 of 2005

Matter is pending

62




Current Status

Engine Valve Limited Mazdoor Sangh v/s Rane Engine Valve Limited

WP No. 7088 of 1995

Writ petition for termination of services of some of the workmen

- High Court, Andhra Pradesh at Hyderabad

Matter is pending

N Krishna High Court, Andhra Pradesh at Hyderabad

v/s The Management of Rane Engine Valves Limited Dismissal from service. Writ petition against the order of the Tribunal.

24/-

WP No. 20276 of 2005

Matter is pending Rs. 6104/- per month is paid to the petitioner

V. Ravi Sankar v/s The Vice President - Operations Rane Engine Valves Limited & Ors Dismissal from service. Writ petition against the order of the Tribunal.

- High Court, Andhra Pradesh at Hyderabad WP No. 20570 of 2001

Matter is pending.

Rane Engine Valves Limited v/s B Siddiramulu Memorandum of settlement is filed in the High Court

325/- High Court, Andhra Pradesh at Hyderabad WP No. 9872 of 1998 and WP No. 12004 of 19981

Matter is pending.

Rane Engine Valves Limited v/s The Industrial Tribunal &Ors. A writ petition was filed against the order of the Tribunal to pay differential amount on the minimum wages revised by the Government.

543/- High Court of Andra Pradesh WP No. 2881 of 1999

Matter is pending

Y Venkat Reddy vs Rane Engine Valves Limited Petition before Labour Court against termination of service.

Labour Court, Hyderabad ID No. 20 of 2005

Matter is pending.

Collective dispute on wage settlement.

I.D.No.246 of 2007 Labour Court, Chennai

Filed counter statement on 12.11.2007

63


Brief Particulars Claim

Amount (Rs. in ‘000)


Current Status

N. Ponnen, S. Jayapal, T.Arunachalam, D.Suresh, V.Arul, R.Murugan V/s Rane Engine Valve Limited Petition before Labour Court against dismissal from service

Labour Court, Chennai I.D.No.577-582 of 2006

Matter is pending.

G. Mahendar & Ors V/s Rane Engine Valve Limited The petitioner approached the Deputy Commissioner of Labour against removal from service. Company has responded to the notice.

Deputy Commissioner of Labour

Matter is pending

Central Excise Rane Engine Valve Limited vs. Commissioner of Central Excise (Hyderabad) SCN dated January 24, 1997 was issued regarding disallowance of MODVAT credit on grinding wheels etc.

56/-

CESAT Appeal no. E/761/2001

The matter is pending before CEGAT, Bangalore

Assistant Commissioner of Central Excise vs. Rane Engine Valve Limited SCN was issued regarding disallowance of MODVAT credit on arm cables, etc.

110/- Assistant Commissioner of Central Excise SCN No. 08/96-97

The company has replied to SCN & matter is pending.

Superintendent of Central Excise vs. Rane Engine Valves Limited SCN was issued regarding disallowance of MODVAT credit.

127/- Superintendent of Central Excise SCN no. 02/1997

The company has replied to the SCN. Matter is pending.

Service Tax A SCN was issued on appropriation of service tax and interest paid on payment to foreign service providers to government account and imposition of penalty under Section 76,77 & 78 of Finance Act, 1994

Tax due Rs. 6526/- and Interest Rs.

3874/-

Central Excise (Appeals), Chennai

The company has preferred an appeal against the order of Commissioner of Service tax.

64


Brief Particulars Claim Amount (Rs.)


Current Status

Sales Tax Cases Kerala State Govt. has issued Notice of Demand for payment of sales tax on stock, which is shown as shortage. Assessment Year 2003-2004.

1003/- Appeal filed against this order.

Due to decrease in sales 1st quarter of 2007-08 in comparison to 1 st quarter of 2006-07the Deputy Commissioner of Trade Tax – 3 has levied a tax (penalty) of Rs.50, 500/-.

50/- Joint Commissioner Trade Tax 3– Kanpur

Filed an appeal against the notice

Land Cases Engine Valves Limited (Rane Engine Valves Limited) vs.

Mandal Revenue Officer & Ors.

MRO claims that the land is assigned Government land. The company has filed an appeal and contented that it is a clear patta land.

Court of District Collector, RR District, HYDERABAD. Appeal No. 1910 of 1999.

Matter is pending.

Others Rane Engine Valve Limited vs. State Of Andhra Pradesh & Ors. A writ petition against levy of electricity duty @ Re. 0.25 per unit on self generated power

High Court, Andhra Pradesh. Writ Petition No. 6095 of 2004.

Matter is pending.

In Re: The A.P. Pollution Control Board & Ors. Suo motto writ petition against the SCN received from A P Pollution control Board

High Court, Andhra Pradesh. Suo Motto Writ Petition No. 3367 of 2006.

The Matter is pending.

Income Tax Cases AY 1991-92 Disallowance of agricultural income and demand of tax

5/- Income Tax Appellate Tribunal

Matter is pending.

Rane Engine Valve Limited vs. Dy. Commissioner of Income Tax AY 1992-93 80HHC computation, unabsorbed depreciation and CIT”s revision order for entertainment allowance.

1,044/- Income Tax Appellate Tribunal. Income Tax Appeal No. 882 and 883(Mds)/96.

Matter is pending.

65




Current Status

Dy. Commissioner of Income Tax vs. Rane Engine Valve Limited AY 1998-99 Disallowance of expenditure

5,755/- Income Tax Appellate Tribunal. Appeal No. 1041/MDS/2002

Matter is pending.

Rane Engine Valve Limited

a. Dispute relating to Computation under section 80 HHC.

vs. Income Tax Officer AY 2003-04

b. Interest income has been considered as “income from other sources” as against business income.

c. Levy of interest under section 234D.

5,925/- Commissioner of Income Tax (Appeals).

Matter is pending.

Rane Engine Valve Limited vs. Income Tax Officer AY 2004-05

Commissioner of Income Tax (Appeals).

The matter is pending.

a. Dispute relating to Computation under section 80 HHC.

b. Interest income has been considered as “income from other sources” as against business income.

66

INFORMATION MEMORANDUM Our Group Companies: Against Rane Brake Lining Limited Brief Particulars Claim Amount

(Rs. in ‘000) Court / Forum / CaseNumber

Current Status

Income Tax Rane Brake Lining Limited v/s Dy. Commissioner of Income Tax An appeal against the order of the Dy. Commissioner of Income Tax. - Lump sum fee (Pune Lease hold land) charged off for IT-kept as DRE in books. - Interest claim by Dept.

A.Y. 1994-95 1040/-A.Y. 1995-96 1717/-

Income Tax Appellate Tribunal.

The matter is still pending for hearing.

Rane Brake Lining Limited v/s Dy. Commissioner of Income Tax. A.Y. 1995-96 Disallowance of marketing arrangement fees to JMA.

1840/-


The matter is still pending for hearing.

The Joint Commissioner of Income Tax. v/s Rane Brake Lining Limited AY 1996-97 Dispute over replacement value of machinery Turnover definition for 80HHC Deductions under 80HHC

2738/-


Appeal of Revenue partly allowed. Cross objection of assessee partly allowed.

Rane Brake Lining Limited v/s

7963/-

The Joint Commissioner of Income Tax. AY 1997-98, 1998-99, 2000-01 Depreciation effect on sale of Hosur undertaking:- -only book value of assets was credited to the block of assets.


Hearing is pending.

67


Brief Particulars / Forum / Case

Number Claim Amount

(Rs. in ‘000) Court Current Status

v/s The Joint Commissioner of Income Tax. AY 1998-99, 2000-01 Depreciation effect on fire accident claim received for fixed assets to be reduced from Gross block.

Rane Brake Lining Limited v/s Dy. Commissioner of Income Tax. AY 2000-01 Mumbai property – depreciation disallowance Dept’s contention asset not put to use.

Incom

156/-e Tax Appellate

Tribunal.

Appeal No.

Appeal is partly allowed.

Rane Brake Lining Limited v/s Income Tax Officer Interest disallowed with reference to investments made by the company

AY 2000-01 9661/-AY 2001-02 3451/-

1)Commissioner Appeals 2) Income Tax Appellate Tribunal.


Rane Brake Lining Limited v/s Income Tax Officer. AY 2003-04 -Dispute over interest disallowance with reference to investments made by the company -Limited export relief due to dispute over exclusions -Dispute over exclusion of 80IB while computing 80HHC benefit -Dispute over common expenses for deduction under 80IB

7707/-Commissioner Appeals

Matter is pending hearing.

68

INFORMATION MEMORANDUM Brief Particulars Claim Amount


Current Status

Rane Brake Lining Ltd., V/s Asst.Comm of Income Tax. An appeal against the order of the Asst.com.of Income Tax. A.Y: 2002-03

- Dispute while computing Deduction Under Sec 80HHC,

Appeal filled against the order on 24.01.2008. Based on theappeal, letter given to drop the

Income Tax (Appeals)

penalty proceedings until disposal of the order. Letter given on 29.01.2008.

Sec 80IA Deduction to be excluded.

A.Y.2002-03 3046/- Notice Under Sec 274 to Impose penalty (For concealment of Income)

The Matter is Pending for Hearing.

Central Excise Cases

Asst Commissioner of Central Excise; SCN No.142/2001 dated 25.5.2001

Dispute over provisional and actual Post Manufacturing Expenses for the period 1996-97

261/-

Appeal No. E/235,236,237/2001

Pending before CESTAT on an appeal by the Department

Dispute relating to classification of un-mounted brake linings.

78/- Appeal filed against the Order in appeal 117/2000(M-II) dated: 20.10.2000 on 12.03.2001 Appeal No. E/290/2001

Pending before CESTAT

Rane Brake Lining Limited v/s Commissioner of Central Excise Dispute relating to classification of friction dust. The company has filed an appeal before the CESTAT

7557/-

CESTAT

Appeal dismissed by CESTAT and company paid Rs. 3016.99 as per its calculation. The matter is pending for the differential amount.

69


Brief Particulars Claim Amount


Current Status

Interest on Supplementary Invoice raised Jan-Feb’07

67/- O-I-O passed by Additional Commissioner of CE, Chennai II Commissionerate

An appeal has been preferred before the Tribunal against the orders of the Additional Commissioner.

Dispute relating to abatement of Post Manufacturing Expenses period from 01.03.1982- 30.11.1983.

894/-

Asst Commissioner of Central Excise; SCN No.139/2001 dated 31.5.2001

Pending

Dispute relating to the assessable value of sales made to wholesale dealers and the treatment of post manufacturing expenses. The department claims differential duty.

990/-

Deputy Commissioner of Central Excise; SCN No.142/2001 dated 25.5.2001

Pending

Dispute relating to assessable value and availment of credit by both the company and the customer on a bought out component.

99/- Deputy Commissioner Pending

Dispute relating to non-inclusion of Finance Charges in the assessable value. The case was decided in favour of the company.

CESTAT

Appeal preferred by the Department against Commissioner (Appeals) Order

Service Tax Cases Rane Brake Lining Limited v/s Dy. Commissioner of Central Excise (STC) Service Tax demanded on royalty paid to foreign collaborator.

1296/- Dy.Commissioner of Central Excise (STC) Hearing awaited.

Service Tax not paid under IPR and BAS Period: 10.09.2004 to 30.09.2006

1333/- C

Joint commissioner of Service Tax

ommissionerate passed SCN No. 151/2007 dt: 27.08.07

Pending

Ineligible credit (Credit availed on Job work charges) wrongly availed and utilized

Deputy Commissionerof Central Excise

passed SCN No.22/2007 dated: 30.08.07

Appeal filed before the Commission of Appeals Pending before Commissioner of appeals

Period April 2005 to July 2007

131/-

O-I-O passed by DC on 15.11.07

Labour Cases G.Jayapalan v/s Rane Brake Lining Limited Against all directors seeking prosecution under Sec.29 of ID Act

-

Assistant Commissioner of Labour A/1469/06 (New.No.770/07)

The locus standi of G Jayapalan questioned by Union. Matter pending.

70

INFORMATION MEMORANDUM Brief Particulars Claim Amount


Current Status

A V Parthasarathy v/s Rane Brake Lining Limited

Claiming Employee Benevolent Fund amount

200/-

Labour Court I C.P.No.698 to 702/02

Preferred an appeal in the High Court

G. Jayapalan v/s - Rane Brake Lining Limited A. Writ petition filed 1. seeking direction to dispose High Court the complaint lodged with a) Secretary, (L&E) Tamilnadu WP.38965/06 b)Chief Inspector of Factories WP.40371/06 2. Direction to management to negotiate on charter of demands WP.40375/06

Matter is pending

3. Seeking ad interim injunction against the W.P.30300/07

wage settlement dated 18.05.2007 B. Defamation case against Management District Munciff Court

Ambattur

Cal.Case.No. 429/06 C. Case against Internal Transfer and wage cut Assisstant

Commissioner of

Labour A.470/07 D. Disputes referred for adjudication by state governement based on failure report of A.C.L on charter of demands filed by GJayapalan.

rial Labour Court 2008 Indust

I.D.10/

Rane Brake Lining Limited v/s Workmen Seeking permanent injunction to restrain them from performing dharna etc., within a radius of 300 metres from factory gate

Labour Court O.S.403/07 in I.A.No.1433/07

Matter is pending disposal

District Munsiff Court Interim stay vacated. High court ordered

v/s disposal of case within 4 weeks

Madras High Court C.R.P.3177/07 & 3178/07

Rane Brake Lining Limited Matter is pending before

District Munsiff Court Rane Brake Lining Limited v/s Workmen Violation court's order by demonstrating in front of factory gate on 17.12.07

High Court

The case is yet to be listed

71



Court / Forum / CaseNumber

Current Status

Sales Tax Cases

Under Tamilnadu General Sales Tax Act AY 2001-02 Tax on Export Sales, 50/-Tax against Form XVII Sales & Penalty 79/-AY 2002-03 Tax on resale of Assets, Addl.Sales Tax 176/-Penalty 471/-AY 2003-04 Tax on sales of Semi- finished goods, non- submission of Form XVII, Tax on Exports 693/-XVII & Tax on Exports 14/-

Appellate Asst.Commissioner (CT)-VI Kuralagam Annexe, Chennai- 600 108

Case pending disposal

Central Sales Tax Act, 1956 AY 2003-04 Tax on non submission of "C" & "D" Forms for interstate sales

1233/-

Appellate Asst.Commissioner (CT)-VI Kuralagam Annexe Chennai-600 108


Kerala General Sales Tax Act AY 2003-04 Tax on stock transfers intercepted at checkpost

102/-

Deputy (Appeals)Commercial Commissioner Taxes, Ernakulam

Security bond deposited for Rs.1,02,368/-

West Bengal General Sales Tax Act AY 2003-04 Local Sales @ 4% wrongly considered as interstate sales

Commercial Tax Officer Howrah Charge, Howrah

Pending refund of tax

Andhra Pradesh General Sales Tax Act AY 2003-04 Non submission of "C", "D" & "F" Forms

4141/-

Commercial Tax Officer, BowenpallyCircle,


Uttar Pradesh Trade Tax Act AY 2007-08 Diff tax

92/- Joint Commisioner Appeal – 2 UP Trade Tax, Kanpur

Case pending

72

INFORMATION MEMORANDUM Rane Holdings Limited

Brief Particulars Claim Amount (RS. IN ‘000)

Court / Forum / Case Number Current Status

Others Dispute related lease rental for lease land 1990-2003 demanded by Tahsildhar, Mylapore.

5400/- Collector of Chennai Appeal filed with Collector of Chennai

Rane (Madras) Limited Brief Particulars Claim Amount

(Rs. in ‘000) Court / Forum / Case Number Current Status

Income Tax Deputy Commissioner of Income Tax v/s Rane Madras Ltd. Erroneous claim of depreciation on machines made by Income Tax authorities: AY1996-97 - Rs.16,33,064/-. AY 1997-98- Rs. 65,00,475/-

740 /- 2795/-

High Court of Madras, Tax Case Appeal No.1129 against ITA No.246/04 Appeal No.1130 against ITA No.717/04

The case was admitted by the High Court and Ordered Notice to the department to appear in the matter.

Commissioner of Income Tax v/s Rane (Madras) Limited Disallowance of claim made u/s 43B towards Payment of Bonus & Leave Salary for AY 2005-06

9204/- Commissioner of Income Tax Appeals

Appeal filed with CIT(Appeals) Stay order being obtained

Service Tax - Velachery Demanded Service tax on Royalty paid to Collaborators classifying it as Consulting Engineering Services

896/- Joint Commissioner of Service Tax, Chennai 35 SCN No.63/2007 dated 12.04.07

The matter is pending before JC, Service Tax..

Demanded Service tax on fees paid to Foreign Service Providers towards Commission, Warehousing and Penalty for non payment

2010/- Commissioner of Service Tax Chennai 35 SCN No.165/2007 dated 11.09.07

Appeal against levy of penalty has been made. The matter is pending.

Labour Cases Four workmen v/s Rane (Madras) Limited, The matter relates to the dismissal of four workmen.

7623/- The Principal Labour Court, Chennai Industrial Dispute No. 560 of 1990


73



(Rs.) Court / Forum / Case Number Current Status

Mr. Devajeeva Aasir v/s Management of Rane (Madras) Ltd., Chennai. The matter relates to a claim for continuity of service and back wages.

88/- The Labour Officer – Conciliation M.M.No. Aa/417/05 dated September 26, 2005

The Labour Officer -Conciliation sent a failure report to the Government.

Mr. Kendagannaswamy v/s The management of Rane Madras Limited Termination of services of an operator for continuous absenteeism.

23/- Labour Court, Mysore IID 88/05


Central Excise-Mysore Cenvat credit availed in 2004 on Extra / Xerox copies of the suppliers invoice2

129/- SCN No.V/87/15/13/04 dt 19.07.2004 OIO No.97 dt 10.01.2005 and OIA No.132 dated 06.06.2005

Tribunal remanded the case to the Range for verification and pass suitable Order. Order No.1145/07 dated 05.10.07

SCN from Deputy Commissioner of Central Excise, Pondicherry for misstatement on clearance of capital goods as scrap goods.

262/- Deputy Commissioner of Central Excise, Pondicherry SCN No.: IV/16/41/2006-UCD dated April 6, 2006 Order-in-Original No. 12/2006

The Tribunal Ordered stay of recovery of the amount and referred the matter to Larger Bench on 03.01.08

EDLI Rane (Madras) Limited v/s 1. The Central Provident

Fund Commissioner. 2. The Regional

Provident Fund Commissioner.

The retrospective cancellation of exemption of EDLI for omission to include trainees in the master policy of LIC.

179/- High Court, Madras WP No.18985 of 2006 and MP Nos. 1&2 of 2006


Rane TRW Steering Systems Limited Brief Particulars

Claim amount (Rs. ‘000)

Court/Forum/ Case number

Current Status

Rane TRW Steering Systems Limited v/s Assistant Commissioner of Central Excise SCN to pay service tax on technical know how fees and royalty paid to Joint Venture partner.

1678 /- CESTAT, Chennai. Appeal No. [86/2003]

The matter is pending for orders.

74

INFORMATION MEMORANDUM Brief Particulars Claim

Amount (Rs.)


Current Status

Rane TRW Steering Systems Limited v/s Assistant Commissioner of Central Excise SCN as to why interest payable on differential duty reversed by the company should not be recovered. .

262/- CESTAT, Chennai. Appeal No. [755/2006]

The matter is pending before the Tribunal.

Commercial Tax Officer, Puddukottai v/s Rane TRW Steering Systems Limited Rejection of sales return claimed. AY 1999-00 AY 2000-01

344/- 277/-

Sales Tax Appellate Tribunal, Chennai (1&2/2008)

The matter is pending before the tribunal

Rane TRW Steering Systems Limited v/s The Regional Provident Fund Commissioner SCN alleging non-payment of provident fund on leave salary.

107/- Provident Fund Tribunal, New Delhi (WP No 6418/04)

Deposit has been paid. The matter is yet to be heard by the Tribunal.

Rane NSK Steering Systems Limited


(Rs in '000) Court/Forum/ Case number Current Status Central Excise Cases

Rane NSK Steering Systems Ltd v/s Superintendent of Central Excise Awaiting Orders

Superintendent of Central Excise Excise duty claimed on cash discount on the invoice Sep 2002-March 2006 1529/- 1.C.NO:V/15/87/57/2005 CX April 2006 - December 2006 419/- 2.C.NO.V/15/87/06/07-ADJ January 2007 - June 2007 371/- 3.C.No.V/15/87/67/2007 -Adj

Rane NSK Steering Systems Ltd v/s Superintendent of Central Excise The company has filed

Superintendent of Central Excise - 1.C.NO:V/15/87/57/2006-ADJ a reply. The matter is

2.C.NO:V/15/87/55/2005 - ADJ pending

Interest on supplementary invoice

75



(Rs.) Court / Forum / CaseNumber

Current Status

Service Tax Cases 390/- Superintendent of Central The company has filed Rane NSK Steering Systems Ltd v/s Excise a reply. The matter is Superintendent of Central Excise pending Disallowance of Service Tax credit availed on freight C.NO.V/15/39/2006 outward

Rane NSK Steering Systems Ltd v/s 397/-Superintendent of Central Excise The company has filed

Superintendent of Central Excise a reply. The matter is pending Disallowance of general abatement of 75% claimed on transport bills Excise Preventive Case Rane NSK Steering Systems Limited v/s Commissioner of Central Excise (Appeals), Chennai Disallowance of: (a) Cenvat credit availed on inputs used for destructive testing 719/- CESTAT, Chennai The matter is pending hearing (b) Cenvat credit availed on tools lying at sub-contractors end 496/- . (c) Demand for interest and penalty equivalent to 25%ED involved 611/- Promoters and Directors of the Company Civil case filed against Mr L Ganesh in respect of 0.42 acre of land purchased in Kodaikanal from Mr V Rajendran, Attuvampatti, Vilapatti Village, Kodaikanal Taluk, Dispute regarding title of the property to Mr V Rajendran. Decree awarded against Mr V Rajendran and Mr L Ganesh by sub-ordinate Judge, Dindigul. Appeal filed by Mr L Ganesh is pending at District Sessions Judge, Dindigul. Value of the property as per the sale deed executed in favour of Mr L Ganesh on 22.03.1990, Rs.42,000.

76

INFORMATION MEMORANDUM GOVERNMENT APPROVALS The Company has received the necessary permissions and approvals from the Government and various Government agencies for the existing activities as detailed hereunder: IEC CODE No. 489012647 Permanent Account Number AAACT1279M

Excise Regn No. LOCATION

Manufacturing A/c Dealer A/c

Local ST Regn No./ VAT TIN No.

CST No.

Alandur, Chennai AAACT1279MXM001 -- 33120721657 954061Medchal, AP AAACT1279MXM008 -- 28489937020 28489937020Madhavarm, Ponneri AAACT1279MXM003 -- 33120721657 954061Aziz Nagar, AP AAACT1279MXM005 -- 28489937020 28489937020Pudukottai District, TN AAACT1279MXM009 -- 33120721657 954061Gurgaon Depot AAACT1279MXM002 AAACT1279MXD001 06621931660 06621931660Pune Depot AAACT1279MXM004 AAACT1279MXD002 27830642941V 27830642941CHyderabad Depot AAACT1279MXM007 28489937020 28489937020Chennai Depot AAACT1279MXM001 33120721657 954061 No further approvals from any Government authority/Reserve Bank of India (RBI) are required by the Company to undertake the existing activities, save and except those approvals, which may be required to be taken in the normal course of business from time to time. The Central Government / RBI accepts no responsibility for the financial soundness or correctness of the statements made in this Information Memorandum. OTHER REGULATORY DISCLOSURES Authority For Listing The Honorable High Court of Madras, vide its Order dated December 20, 2007 has approved the Composite Scheme of Demerger, Merger and Amalgamation between Rane Engine Valves Limited (Demerged Company 1), Rane Brake Linings Limited (Demerged Company 2), Techcons Limited (Resulting Company 1 –hereinafter referred as Rane Engine Valve Limited), Rane Brake Products Limited (Resulting Company 2 – hereinafter referred as Rane Brake Lining Limited) and Rane Holdings Limited (Transferee Company) whereby the entire manufacturing undertaking of EREVL has been transferred to and vested with Rane Engine Valve Limited w.e.f. April 01, 2007 (i.e. the Appointed Date under the Scheme) under Section 391 read with Section 394 of the Companies Act, 1956. In accordance with the said Scheme, the Equity Shares of Rane Engine Valve Limited issued pursuant to the Scheme shall, subject to applicable regulations, be listed and admitted to trading on Madras Stock Exchange Limited (MSE), National Stock Exchange of India Limited (“NSE”) and The Bombay Stock Exchange Limited (“BSE”). Such listing and admission for trading is not automatic and will be subject to fulfillment by the Company of listing criteria of MSE, NSE and BSE for such issues and also subject to such other terms and conditions as may be prescribed by MSE, NSE and BSE at the time of the application by the Company seeking listing. The aforesaid Order of the Hon’ble High Court of Madras was filed by the Company with the Registrar of Companies (“RoC”), Tamil Nadu, Chennai, on February 6, 2008 and the Scheme became effective from the appointed date i.e. April 01, 2007. Eligibility Criterion There being no Initial Public Offering or Rights Issue, the eligibility criteria in terms of Clause 2.2.1 of SEBI (DIP) Guidelines, 2000 is not applicable. However, the company has made the application through National

77


Stock Exchange of India Limited to SEBI for relaxation from the applicability of the provisions of Regulation 19(2)(b) of Securities Contract (Regulations) Rules, 1957 under Clause 8.3.5 of SEBI (DIP) Guidelines, 2000 The Company will be submitting its Information Memorandum, containing information about itself, making disclosures in line with the disclosure requirement for public issues, as applicable, to MSE, NSE and BSE for making the said Information Memorandum available to public through their websites viz. www.bseindia.com and www.nseindia.com. The Company has made the said Information Memorandum available on its website viz.www.rane.co.in The Company will publish an advertisement in the newspapers containing its details in line with the details required as per clause 8.3.5.4 of SEBI (DIP) Guidelines. The advertisement will draw a specific reference to the availability of aforesaid Information Memorandum on its website. Prohibition by SEBI The Company, its directors, its promoters, other companies promoted by the promoters and companies with which the Company’s directors are associated as directors have not been prohibited from accessing the capital markets under any order or direction passed by SEBI. Caution The Company accepts no responsibility for statements made otherwise than in the Information Memorandum or in the advertisements to be published in terms of Clause 8.3.5.4 of SEBI (DIP) Guidelines, 2000 or any other material issued by or at the instance of the Company and anyone placing reliance on any other source of information would be doing so at his or her own risk. All information shall be made available by the Company to the public and investors at large and no selective or additional information would be available for a section of the investors in any manner. Disclaimer Clause of the MSE As required, a copy of this Information Memorandum has been submitted to MSE. MSE has vide its letter ref. MSE / SO / LD / 738 / 581 / 07 dated October 24, 2007, conveyed their no-objection to the Composite Scheme of Demerger, Merger and Amalgamation under clause 24(f) of the Listing agreement and by virtue of that approval MSE’s name in this Information Memorandum as one of the stock exchanges on which this Company’s securities are proposed to be listed has been incorporated. It is to be distinctly understood that the aforesaid permission given by MSE should not in any way be deemed or construed to mean that this Information Memorandum has been cleared or approved by MSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Information Memorandum; nor does it warrant that this Company’s securities will be listed or will continue to be listed on the MSE; nor does it take any responsibility for the financial or other soundness of this Company, its promoters, its management or any scheme or project of this Company. Every person who desires to apply for or otherwise acquires any securities of the Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the MSE whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever. Disclaimer Clause of the NSE As required, a copy of this Information Memorandum has been submitted to NSE. NSE has vide its letter ref. NSE/LIST/58142-X dated October 12, 2007, conveyed their no-objection to the Composite Scheme of Demerger, Merger and Amalgamation under clause 24(f) of the Listing agreement and by virtue of that approval NSE’s name in this Information Memorandum as one of the stock exchanges on which this Company’s securities are proposed to be listed has been incorporated. It is to be distinctly understood that the aforesaid permission given by NSE should not in any way be deemed or construed to mean that this Information Memorandum has been cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Information Memorandum; nor does it warrant that this Company’s securities will be listed or will continue to be listed on the NSE; nor does it take any responsibility for the financial or other soundness of this Company, its promoters, its management or any scheme or project of this Company. Every person who desires to apply for or otherwise acquires any securities of the Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the NSE whatsoever by reason of any loss which may be suffered by such person consequent to or

78

INFORMATION MEMORANDUM in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever. Disclaimer Clause of BSE As required, a copy of this Information Memorandum has been submitted to BSE. The BSE has vide its letter DCS / AMAL / AKS / 24(f) / 1594 / 2007-08 dated October 17, 2007has approved the Composite Scheme of Demerger, Merger and Amalgamation under clause 24(f) of the Listing Agreement and by virtue of that approval the BSE’s name in this information Memorandum as one of the Stock Exchanges on which the Company’s securities are proposed to be listed has been incorporated. The BSE does not in any manner:

o warrant, certify or endorse the correctness or completeness of any of the contents o of this Information Memorandum; or o warrant that this Company’s securities will be listed or will continue to be listed o on the BSE; or o take any responsibility for the financial or other soundness of this Company, its o promoters, its management or any scheme or project of this Company; and o it should not for any reason be deemed or construed to mean that this Information o Memorandum has been cleared or approved by the BSE.

Every person who desires to apply for or otherwise acquire any securities of this Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the BSE whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever. Filing Copies of this Information Memorandum have been filed with MSE, NSE and BSE in due compliance. Listing Applications have been made to MSE, NSE and BSE for permission to deal in and for an official quotation of the Equity Shares of the Company. The Company has nominated NSE as the Designated Stock Exchange for the aforesaid listing of the shares. The Company has already taken steps for the completion of necessary formalities for listing and commencement of trading at all the Stock Exchanges mentioned above. Demat Credit The Company has executed Agreements with NSDL and CDSL for admitting its securities in demat form.

Stock Market Data for Equity Shares of the company Equity Shares of the company are not listed on any stock exchanges. The company is seeking approval for listing of its shares through this Information Memorandum. Particulars Regarding Previous Public or Rights Issues During the Last Five Years The company has not made any previous public or rights issue during the last five years. There is no issue of shares otherwise than for cash and there are no outstanding debentures and redeemable preference shares. There has been no revaluation of assets of the Company. Companies under the Same Management

There are no listed companies under the same management within the meaning of Section 370(1B) of the Companies Act, 1956 which made any public/rights issue other than the means mentioned under the “Financial Information of Group Companies” There is no group company of having a negative net worth or under winding up or a sick company or under BIFR. Further, the Company has not disassociated from any company. Further, none of group companies have applied for striking off their name from the RoC.

79


Outstanding debentures, bonds and redeemable preference shares and other instruments There are no outstanding debentures, bonds and redeemable preference shares. Stock Market Data for Equity Shares of the company Equity Shares of the company are not listed on any stock exchanges. The company is seeking approval for listing of its shares through this Information Memorandum. Mechanism evolved for redressal of Investor Grievances The Investors service committee was constituted to look into all types of grievances from shareholders and redress them expeditiously in a fit and proper manner. The committee is comprised of the following directors: 1. Mr. L Lakshman - Chairman (Non Executive Director) 2.Mr. L Ganesh - Member (Executive Director) 3.Mr.C.Prabhakar - Member(Independent Director) The company has appointed Mr. K Sankaranarayanan, Company Secretary as Compliance officer. He can be contacted at the following address: Mr. K Sankaranarayanan ‘Maithri’, 132, Cathedral Road Chennai 600 086 Ph : + 91 44 28112472 Fax : + 91 44 28112449 Email : [email protected] Change in auditors of the company during the last three years and reasons thereof There has been no change in the auditors of the company during the last three years Revaluation of Assets There has been no revaluation of assets of the Company.

80

INFORMATION MEMORANDUM SECTION VII MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION Articles of Association Issue of Share Certificates 14. (1) Share Certificates shall be issued to every person whose name is entered in the register of members

within three months after allotment or within one month after the receipt of the application for registration of the transfer or within such other period as the conditions of issue shall provide.

(2) Such certificates shall be issued in market lots and where certificates are issued either for more or less

than the market lots, subdivision and/or consolidation will be done without charge. (3) Every certificate shall be under the seal of the Company and shall specify the shares to which it relates

and the amount paid up thereon. (4) In respect of any share or shares held jointly by several persons, the delivery of the certificates to one

of the several joint holders shall be sufficient delivery to all such holders. 15. If a share certificate is old, decrepit or worn out or where the cages for recording transfers have been

fully utilised, new certificates in replacement of the same shall be issued without any charge. Where a share certificate is lost or destroyed, it may be replaced on payment of such fee not exceeding rupee one and on such terms, if any, as to evidence and indemnity and payment of out of pocket expenses incurred by the Company in investigating the evidence as the Directors think fit.

Calls on Shares 16. (a) The Directors may, from time to time, make such calls as they think fit upon the members in respect of

all moneys unpaid on the shares held by them respectively and not by the conditions of allotment thereof made payable at fixed times, and each member shall pay the amount of every call so made on him to the persons and at the times and places appointed by the Directors.

(b) A call may be made payable by instalments and shall be deemed to have been made when the

resolution of the Directors authorising such call was passed. (c) A call may be revoked or postponed at the discretion of the Directors. 17. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. 18. If a sum called in respect of a share is not paid on or before the day appointed for the payment thereof,

the holder or holders of the share, from whom the sum is due, shall pay interest upon the sum at the rate of 9 per cent (or any lesser rate which may from time to time be fixed by the Directors) per annum from the day appointed for the payment thereof to the time of actual payment, but the Directors shall be at liberty to waive payment of that interest wholly or in part.

19. Neither the receipt by the Company of a portion of any money which shall from time to time be due

from any shareholder to the company in respect of his shares, nor any indulgence granted by the Company in respect of the payment of any such money, shall preclude the company from thereafter proceeding to enforce a forfeiture of such shares as hereinafter provided.

81


20. (a) Any sum which, by the terms of issue of a share, becomes payable on allotment or at a fixed time, on account of the amount of the shares, shall be deemed to be a call duly made and payable on the date on which by the terms of issue, such sum becomes payable.

(b) In case of non-payment of sum, all the relevant provisions of these regulations as to payment of

interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified.

21. The Directors may, if they think fit, receive from any member willing to advance the same, all or any

part of the moneys uncalled and unpaid upon any shares held by him, and upon all or any of the moneys so advanced, may (until the same would, but for such advance, become presently payable) pay interest at such rate not exceeding 9 per cent, as may be agreed upon between the Directors and the member paying the sum in advance.

Provided that an amount paid up in advance of calls shall not in respect thereof, confer a right to

dividends or to participate in profits. Forfeiture of Shares 22. If any shareholder fails to pay any money due from him in respect of any call made on a share on the day

appointed for the payment thereof or any interest in respect of such call and any expense that may be incurred in connection therewith, the Directors may at any time thereafter and during such time as such money remains unpaid, serve a notice on him requiring payment of the money payable in respect of such share, call or interest and expenses incurred in connection therewith.

23. The notice shall name a day not earlier than the expiration of 14 days from the date of service of the

notice on or before which day the payment required by the notice is to be made and shall state that in the event of non-payment on or before the day so named the share or shares in respect of which the notice is issued will be liable to be forfeited.

24. If the requirements of any such notice as aforesaid are not complied with, any share in respect of which

the notice has been given may, at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the Directors to that effect, and notice of the forfeiture shall be given to the holder of such share.

25. Every share, which shall be so declared forfeited, shall thereupon be the property of the Company and

may at any time thereafter be sold or otherwise disposed of on such terms and in such manner as the Directors think fit and at any time before a sale or disposition, the forfeiture may be cancelled on such terms as the Directors think fit.

26. The forfeiture of any share shall involve the extinction at the time of the forfeiture of all interest in, and

also of all claims and demands against the Company in respect of the share and all dividends and bonuses payable in respect thereof and also all other rights incident to the shares.

27. A person whose shares have been forfeited shall cease to be a shareholder in respect of the shares so

forfeited but shall notwithstanding the forfeiture remain liable to pay to the Company all money which at the date of forfeiture remains payable by him to the company in respect of the shares.

28. (a) A duly verified declaration in writing that the declarant is a Director or the secretary of the Company,

and that a share or shares in the Company has been duly forfeited on a date stated in the declaration, shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share or shares.

(b) The Company may receive the consideration, if any given for the share on any sale or disposal thereof

and may execute a transfer of the share in favour of the person to whom the share is sold or disposed of. (c) The transferee shall thereupon be registered as the holder of the share.

82

INFORMATION MEMORANDUM (d) The transferee shall not be bound to see to the application of the purchase money, if any, nor shall his

title to the share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the share.

29. The provisions of these regulations as to forfeiture shall apply in the case of non-payment of any sum

which by the terms of issue of a share becomes payable at a fixed time on account of the amount of the shares as if the same had been payable by virtue of a call duly made and notified.

31. The company shall have a first and paramount lien upon all the shares (other than fully paid up shares) registered in the name of each member (whether solely or jointly with others) and upon the proceeds of sale thereof for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such shares and no equitable interest in any share shall be created except upon the footing and condition that Article 11 hereof will have full effect. And such lien shall extend to all dividends and bonuses from time to time declared in respect of such shares. Unless otherwise agreed the registration of a transfer of shares shall operate as a waiver of the company’s lien if any on such shares. The Directors may at any time declare any shares wholly or in part to be exempt from the provisions of this clause.

Surrender of Shares 30. The Directors may accept on behalf of and for the benefit of the Company a surrender of any shares

liable to forfeiture and so far as the law permits of any other shares on such terms as they think fit provided that no part of the assets of the Company shall be employed in the purchase of the Company’s shares.

Lien on Shares

32. The Company may sell, in such manner as the Board thinks fit, any shares on which the company has

lien: Provided that no sale shall be made – (a) Unless a sum in respect of which the lien exists is presently payable. or (b) Until the expiration of fourteen days after a notice in writing stating and demanding payment of such

amount in respect of which the lien exists as is presently payable, has been given to the registered holder for the time being of the share or the person entitled thereto by reason of his death or insolvency.

33. (a) To give effect to any such sale, the Board may authorise some person to transfer the shares sold to the

purchaser thereof. (b) The purchaser shall be registered as the holder of the shares comprised in any such transfer. (c) The purchaser shall not be bound to see to the application of the purchase money nor shall his title to

the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale. 34. (a) The proceeds of the sale shall be received by the company and applied in payment of such part of the

amount in respect of which the lien exists as is presently payable. (b) The residue, if any, shall, subject to a lien for sums not presently payable as existed upon the shares

before the sale, be paid to the person entitled to the shares at the date of the sale. Transfer and Transmission of Shares

83


35. The Company shall keep a book to be called “The Register of Transfers” and therein shall be legibly and distinctively entered the particulars of every transfer or transmission of any share of the Company.

Nothing contained in this article shall apply to transfer of shares effected by the transferor and the transferee both of whom are entered as beneficial owners in the records of a depository.

(b) any transfer of shares on which the company has a lien.

36 (a) The instrument of transfer of any share in the company shall be executed by or on behalf of both the

transferor and transferee. (b) The transferor shall be deemed to remain a holder of the share until the name of the transferee is

entered in the register of members in respect thereof. 37. Shares in the capital of the Company shall be transferred by an instrument of transfer in writing signed

by the Transferor and the Transferee, duly stamped and such instrument of transfer shall be in the prescribed form and shall in all respects comply with the provisions of Section 108 of the Companies Act and the rules prescribed there under and any amendments thereof.

38. The Board may, subject to the right of appeal conferred by Section 111 of the Companies Act, decline to

register : (a) the transfer of a share, not being a fully-paid share, to a person of whom they do not approve

or

39. Provided that the registration of a transfer shall not be refused on the grounds that the transferor is either

alone or jointly with any other person or persons indebted to the company on any account whatsoever. 40. The registration of transfers may be suspended at such times and for such periods as the Board may from

time to time determine.Provided that such registration shall not be suspended for more than forty-five days in any year.

41. On giving not less than seven days previous notice by some newspaper circulating in the district in which

the office is situate, the Transfer Books and Register of Members may be closed during such time as the Directors think fit, not exceeding in the whole forty five days in each year, but not exceeding thirty days at a time.

Transmission of Shares 42. (1) On the death of a member, the survivor or survivors where the member was a joint holder, and his

legal representatives where he was a sole holder, shall be the only persons recognised by the company as having any title to his interest in the shares.

(2) Nothing in sub-clause (1) shall release the estate of the deceased joint holder from any liability in

respect of any share which had been jointly held by him with other persons. 43. (1) Any person becoming entitled to a share in consequence of the death or insolvency of a member may,

upon such evidence being produced as may from time to time properly be required by the Board and subject to hereinafter provided, elect, either—

(a) to be registered himself as holder of the share or (b) to make such transfer of the share as the deceased or insolvent member could have made.

84

INFORMATION MEMORANDUM (2) The Board shall, in either case, have the same right to decline or suspend registration as it would have

had, if the deceased or insolvent member had transferred the share before his death or insolvency. 44. (1) If the person so becoming entitled shall elect to be registered as holder of the share himself he shall

deliver or send to the company a notice in writing signed by him stating that he so elects. (2) If the person aforesaid shall elect to transfer the share, he shall testify his election by executing a

transfer of the share. (3) All the limitations, restrictions and provisions of these regulations relating to the right of transfer and

the registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the death or insolvency of the member had not occurred and the notice or transfer were a transfer signed by that member.

45. A person becoming entitled to a share by reason of the death or insolvency of the holder shall be entitled

to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share except that he shall not, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the company.

Provided that the Board may at any time give notice requiring any such person to elect either to be

registered himself or to transfer the share, and if the notice is not complied with within ninety days the Board may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the share, until the requirements of the notice have been complied with.

The Company shall incur no liability or responsibility whatsoever in consequence of registering or giving

effect to any transfer of share made or purporting to be made by any apparent legal owner thereof to the prejudice of persons having or claiming any equitable right, title or interest to, or in the same shares notwithstanding that the Company may have had notice of such equitable right, title or interest or notice prohibiting registration of such transfer and may have entered such notice or referred thereto in any book of the Company and the Company shall not be bound or required to attend or give effect to any notice which may be given to them of any equitable right, title or interest or be under any liability for refusing or neglecting so to do, though it may have been entered or referred to in some book of the Company but the Company shall nevertheless be at liberty to regard and attend to any such notice and give effect thereto if the Directors shall so think fit.

46. Except as specifically provided in these Articles, the provisions relating to joint holders of shares, calls,

lien on shares, forfeiture of shares and transfer and transmission of shares shall be applicable to shares held in depository so far as they are applicable to shares held in physical form subject to the provisions of the Depositories Act, 1996 or such other regulations for the time being in force.

47. Notwithstanding anything contained in these Articles of Association, the company shall be entitled to

dematerialise shares including preference shares, debentures and other securities pursuant to the Depositories Act, 1996 and, to offer its shares, debentures and other securities for issue in dematerialised form. The company shall further be entitled to maintain a Register of Members with the details of members holding shares both in material and dematerialised form in any media as permitted by law including any form of electronic media.

48. Notwithstanding anything contained herein, in the case of transfer of shares whether preference and or

equity or other marketable securities, where the company has not issued certificates and where such shares or securities are being held in electronic and fungible form; the provisions of Depositories Act, 1996 shall apply.

85


49. A Register of Index of beneficial owners maintained by a depository under section 11 of the Depositories Act, 1996 shall be deemed to be an Index of Members and Register of Debentureholders, as the case may be, for the purpose of the Act.

Alteration of Capital 58. (1) The Company may, from time to time, by ordinary resolution increase the share capital by

such sum to be divided into shares of such amount, as may be specified in the resolution.

(2) Without prejudice to any special rights or privileges to any existing shares in the capital of the company, the new shares may be issued upon such terms and conditions and with such rights and privileges annexed thereto as the General Meeting, resolving upon the creation thereof, shall direct and if no direction is given, as the Directors shall determine ; and in particular such shares may be issued with a preferential or qualified right to dividends and in the distribution of assets of the Company.

Provided that option or right to call of shares shall not be given to any person or persons without the

sanction of the company in General Meeting. (3) The Company may, by ordinary resolution :-- (a) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares ; (b) sub-divide its existing shares or any of them into shares of smaller amount than if fixed by the

memorandum, subject, nevertheless, to the provision of clause (d) of sub-section (1) of Section 94 of the Companies Act ;

(c) cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be

taken by any person. 59. The Company may, by special resolution, reduce in any manner and with, and subject to, any incident

authorised and consent required by law –

(a) its share capital ; (b) any capital redemption reserve fund ; or (c) any share premium account. Modification of Rights 60. (1) If at any time the capital by reason of the issue of preference shares or otherwise is divided into

different classes of shares, all or any of the rights and privileges attached to each class may be modified, abrogated or varied with the consent in writing by the holders of at least three-fourths of the issued shares of that class, or with the sanction of a resolution passed at a separate general meeting of the holders of shares of that class and supported by the votes of the holders of not less than three-fourths of that class of shares.

(2) To every such separate general meeting the provisions of these regulations relating to general meetings

shall mutatis mutandis apply. (3) The rights conferred upon the holders of any class issued with preferred or other rights shall not unless

otherwise expressly provided by the terms of issue of the shares of that class be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

86

INFORMATION MEMORANDUM Votes of Members 90 Subject to any rights or restrictions for the time being attached to any class or classes of shares –

(a) on a show of hands, every member present in person shall have one vote, and (b) on a poll, the voting rights of members shall be as laid down in Section 87.

91. In the cases of joint holders, the vote of the senior who tenders a vote whether in person or by proxy,

shall be accepted to the exclusion of the votes of the other joint holders. For this purpose, seniority shall be determined by the order in which the names stand in the register of

members.

Dividends and Reserve

92. Any member, guardian or other person entitled under the transmission clause to transfer any share,

may vote at any General Meeting in respect thereof in the same manner as if he were the registered holder of such shares provided that he shall satisfy the Directors of his right to transfer such shares or the Directors shall have previously admitted his right to vote at such meeting in respect thereof.

93. The vote of a member who is a lunatic, or idiot or a minor shall not be recorded except by his

Committee, or legal curator or guardian respectively. 94. No member shall be entitled to vote at any general meeting unless all calls or other sums presently

payable by him in respect of shares in the company have been paid. 95. (1) No objection shall be raised to the qualification of any voter except at the meeting or adjourned

meeting at which the vote objected to is given or tendered, and every vote not disallowed at such meeting shall be valid for all purposes.

(2) Any such objection made in due time shall be referred to the chairman of the meeting, whose decision shall be final and conclusive.

96. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it

is signed or a notarially certified copy of that power or authority, shall be deposited at the registered office of the company not less than 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote, or, in the case of a poll, not less than 24 hours before the time appointed for taking of the poll ; and in default the instrument of the proxy shall not be treated as valid.

97. An instrument appointing a proxy shall be in either of the forms in schedule IX to the Act or a form as

near thereto as circumstances admit.

98. A vote given in accordance with the terms of an instrument of proxy shall be valid, notwithstanding the previous death or insanity of the principal or the revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the shares in respect of which the proxy is given.

Provided that no intimation in writing of such death, insanity, revocation or transfer shall have been

received by the company at the office before the commencement of the meeting or adjourned meeting at which the proxy is used.

99. The Chairman of the meeting shall be the sole judge of the validity of every vote tendered at such

meeting, and shall be entitled to require such evidence as he may in his discretion think fit of the due execution of an instrument of proxy or power of attorney and that the same has not been revoked.

137. The Company in General Meeting may declare dividends, but no dividend shall exceed the amount recommended by the Board.

87


138. The Board may from time to time pay to the members such interim dividends as appear to it, to be justified by the profits of the Company.

139. (1) The Board may, before recommending any dividend, set aside out of the profits of the

Company such sums as it thinks proper as a reserve or reserves which shall, at the discretion of the Board be applicable for any purpose to which the profits of the Company may be properly applied including provisions for meeting contingencies or for equalising dividends ; and pending such application may, at the like discretion either be employed in the business of the Company or be invested in such investment (other than shares of the company) as the Board may, from time to time think fit.

(2) The Board may also carry forward any profits which it may think prudent not to divide,

without setting them aside as a reserve. 140. (1) Subject to the rights of persons, if any, entitled to shares with special rights as to dividends

and subject to any specific provisions made in that behalf by the General Meeting sanctioning the dividend all dividends shall be declared and paid according to the amounts paid or credited as paid on the shares in respect whereof the dividend is paid, but if and so long as nothing is paid upon any of the shares in the Company, dividends may be declared and paid according to the amounts of the shares.

(2) No amount paid or credited as paid on a share in advance of calls shall be treated for the

purpose of the regulation as paid on the share. (3) Subject to any direction given in this behalf of the Company in General Meeting all dividends

shall be apportioned and paid proportionately to the amounts paid or credited as paid on the shares during any portion or portions of the period in respect of which the dividend is paid ; but, if any share is issued in terms providing that it shall rank for dividend as from a particular date, such share shall rank for dividend accordingly.

141. The Board may deduct from any dividend payable to any member all sums of money, if any, presently

payable by him to the Company on account of calls or otherwise in relation to the shares of the Company.

142. (1) Any General Meeting declaring a dividend or bonus may direct payment of such dividend or

bonus, wholly or partly, by the distribution of specific assets ; and the Board shall give effect to the resolution of the Meeting.

(2) Where any difficulty arises in regard to such distribution, the Board may settle the same as it

thinks expedient, and in particular may issue fractional certificate and fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any members upon the footing of the value so fixed in order to adjust the rights of all parties and may vest any such specific assets in trustees as may seem expedient to the Board.

143. (1) Any dividend, interest or other moneys payable in cash in respect of shares may be paid by

cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of that one of the joint holders who is first named on the register of members, or to such persons and to such address as the joint holders may in writing direct.

(2) Every such cheque or warrant shall be made payable to the order of the person to whom it is

sent. 144. Any one of two or more joint holders of a share may give effectual receipts for any dividends, bonuses

or other moneys payable in respect of such share.

88

INFORMATION MEMORANDUM 145. Notice of any dividend that may have been declared shall be given to the persons entitled to share

therein in the manner mentioned in the Act. 146. (1) No dividend shall bear interest against the Company. (2) Unclaimed dividends shall not be forfeited unless the claim thereto becomes barred by the

expiry of six years.

89


SECTION VIII XIX. DOCUMENTS FOR INSPECTION 1. Memorandum and Articles of Association of the Company 2. Certificate of incorporation issued by the Registrar of Companies, Tamil Nadu, Chennai 3. Scheme of Demerger, Merger and Amalgamation for demerger and merger of the manufacturing

undertaking of Rane Engine Valves Limited into the Company 4. Order of the Hon’ble High Court of Madras, dated December 20, 2007 sanctioning the Scheme of

Demerger, Merger and Amalgamation under Section 391 read with Section 394 of the Companies Act, 1956.

Date: 04.04.2008

5. Annual Reports of the Company for the year ended March 31, 2007, March 31, 2006 and March 31, 2005.

XX. DECLARATION NO STATEMENT MADE IN THIS INFORMATION MEMORANDUM SHALL CONTRAVENE ANY OF THE PROVISIONS OF THE COMPANIES ACT 1956 AND THE RULES MADE THEREUNDER. ALL THE LEGAL REQUIREMENTS AS ALSO THE GUIDELINES, INSTRUCTIONS, ETC, ISSUED BY SEBI, GOVERNMENT OR ANY OTHER COMPETENT AUTHORITY IN RESPECT OF LISTING OF SECURITIES HAVE BEEN DULY COMPLIED WITH.

ALL THE INFORMATION CONTAINED IN THIS DOCUMENT ARE TRUE AND CORRECT. On behalf of the Board of Directors of RANE ENGINE VALVE LIMITED L GANESH K SANKARANARAYANAN Chairman & Managing Director General Manager – Finance & Secretary

Place: Chennai

90

Rane (Madras) LimitedFor taking an investment decision, investors must rely on their own examination...

Documents

Transcript of Rane (Madras) LimitedFor taking an investment decision, investors must rely on their own examination...